Mercader Loan Status. Programs for the Purchase of Low Emission Vehicles in Mexico

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Darren Clark
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1 Mercader Loan Status Programs for the Purchase of Low Emission Vehicles in Mexico Board of Directors Meeting Hermosillo, Sonora June 15, 2017

2 Background: Pilot Program June 24, 2014: Board certified the Border Wide Public Transportation Improvement Program in Mexico for the acquisition of low emission buses, contingent upon certain reporting requirements during the course of the Program. September 30, 2014: NADB and Mercader Financial, SOFOM, E.R. (Mercader) entered into a MX$120 million revolving credit agreement. January 31, 2016: Credit line had been fully drawn down to partially fund the purchase of 58 units, as reported at the June 2016 Board Meeting. May 31, 2017: MX$22.5 million currently available for disbursement. 2

3 Background: Second Program September 13, 2016: Based on the positive results of the pilot program, the Board certified a second program, the Borderwide Program for the Purchase of Low Emission Vehicles in Mexico, and authorized a second revolving line of credit for MX$500 million. September 22, 2016: NADB and Mercader entered into a MX$500 million revolving credit agreement. November 30, 2016: Credit line had been fully drawn down to partially fund the purchase of 285 additional units. May 31, 2017: MX$47.9 million currently available for disbursement. 3

4 Status of Second Program and Loan May 2017 MX$503.4 million (~US$26.0 million) has been disbursed. 285 low emission buses for public transportation have been financed in eight border cities for a total invoiced amount of MX$642.7 million. 4

Disbursement Analysis May 31, 2017 Disbursement Outstanding Amount % of

Date Balance (MX$ Millions) Loan (Months) Rate Financed (MX$ Millions) 1

3% 12 Oct 2016 64 8.256% 23 $ 42.25 3 $ 59.62 11.8% 28 Oct 2016 96 9.

34 10.0% 10 Nov 2016 65 8.660% 24 $ 46.46 6 $ 36.03 7.

5 Disbursement Analysis May 31, 2017 Disbursement Outstanding Amount % of Term Interest Vehicles Disb. Date Balance (MX$ Millions) Loan (Months) Rate Financed (MX$ Millions) 1 $ % 29 Sep % 132 $ $ % 12 Oct % 23 $ $ % 28 Oct % 40 $ $ % 28 Oct % 35 $ $ % 10 Nov % 24 $ $ % 29 Nov % 31 $ Total $ % % 285 $ Diesel 107 Compressed Natural Gas Linner Picker Linner G Runner 5

6 Loan Breakdown by Municipality 3.9% 3.3% 0.5% 5.0% 5.4% 27.3% 16.3% 16.5% 21.9% Tijuana, B.C. 27.3% Cd. Juárez, CHIH 21.9% Guadalupe, N.L. 16.5% Hermosillo, SON 16.3% Monterrey, N.L. 5.4% Escobedo, N.L. 5.0% Apodaca, N.L. 3.9% García, N.L. 3.3% Other (fees) 0.5% 6

7 Results by Public Transportation Company Cities Public Transportation Company Units Financed Loan Amount Diesel CNG (MX$ Millions) Guadalupe and Monterrey, NL Arturo Gerardo Leal González y Rocío Leal Montemayor 5 $ 9.0 Unión de Permisionarios Ruta Larga 3 47 $ 91.8 Garcia and Monterrey, NL Unión de Permisionarios de Microbuses Ruta 310, S.C. 18 $ 38.2 Escobedo, NL Unión de Permisionarios de Microbuses Ruta 317, S.C. 13 $ 23.2 Apodaca, NL Unión de Ruteros Número 327 del Noreste y Anexas 21 de Marzo, S.C $ 32.5 Subtotal $ Tijuana, BC Transportes de BC Azul y Blanco 2 $ 1.4 SITT de Tijuana, S.A. de C.V. 71 $ 95.6 Subtotal 73 $ 97.0 Integradora Transporte Masivo Cd. Juárez 35 $ 80.3 Ciudad Juarez, Chih Transporte de Personal Joselyn 30 $ 44.6 Colectivos de Juárez Plus, S. de R.L. de C.V. 7 $ 9.4 Subtotal $ Hermosillo, Son Concentradora Hermosillo del Transporte Público, S.A. de C.V. 30 $ 62.0 Portus Intermodales, S.A. de C.V. 10 $ 15.6 Subtotal 40 $ 77.5 Total $ CNG = Compressed natural gas 7

8 Results Matrix Current Outputs May 2017 Projected Actual Technical: 250 units Technical: 285 units 250 diesel 178 diesel 0 compressed natural gas 107 compressed natural gas Financial: DSCR Financial: DSCR 1.20x 1.26x Full Disbursement: 24 months Full Disbursement: 3 months Q to Q Q to Q Client down payments: Client down payments: $125.0 million pesos (25.0%) $141.9 million pesos (28.3%) DSCR= Debt Service Coverage Ratio 8

Results Matrix Expected Project Outcomes Our baseline case contemplated an initial purchase of 250 diesel buses with EPA 2004 emission technology

9 Results Matrix Expected Project Outcomes Our baseline case contemplated an initial purchase of 250 diesel buses with EPA 2004 emission technology which, under these premises, would displace an estimated metric tons/year of CO 2, 75.0 metric tons/year of NOx and 3.0 metric tons/year of HC. 9

10 Results Matrix Current Outcomes May 2017 Emissions Displacement (tons/year) Pollutants* Projected** 250 Diesel Units Actual** 178 Diesel Units & 107 CNG Units Difference Carbon dioxide (CO 2 ) , ,452.8 Nitrogen Oxides (NOx) Hydrocarbons (HC)*** * Emission factors: EPA NOx and HC; Intergovernmental Panel on Climate Change (IPCC) CO 2. ** Diesel units comply with 2004 EPA standards; Compressed natural gas (CNG) units comply with EPA 2013 standards. *** HC generated by incomplete combustion. The observed surplus in reduced emissions of NOx (54), HC (1.3) and CO 2 (1,452.8) is supported by the inclusion of 107 CNG units, which pollute about 95% less NOx, 68% less HC and 18% less CO 2 than EPA 1998 diesel powered units, according to EPA emissions standards. 10

11 Results Measurements Efforts Surveys were applied to the 12 public transportation companies to obtain more information about the sector in the border cities and to better assess the benefits of the project. Relevant findings include: New units will be used to replace 10 buses in Hermosillo, 42 in Monterrey and 7 in Juarez. In Tijuana, 71 new buses replaced 156 collective taxis as part of the plan to modernize the public transportation system. 32 of the 107 CNG units will replace diesel units. 11

Implementation Status & Results Mexico MX Urban Transport Transformation Progr (P107159)

losure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Implementation Status & Results Mexico MX Urban Transport Transformation Progr (P107159) Operation