Circular 7/2010 — Syndicated Placement of Government Securities

(This Circular was repealed by Circular 16/2011 published in the Official Gazette of the Federation on July 12, 2011) CIRCULAR 7/2010 Mexico City, February 10, 2010. TO CREDIT INSTITUTIONS AND SECURITIES COMPANIES: SUBJECT: RULES FOR THE SYNDICATED PLACEMENT OF GOVERNMENT SECURITIES

The Banco de México, in its capacity as financial agent of the Federal Government, pursuant to Articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States; 3, fraction III, 7, fraction I, and 10 of the Banco de México Law; 22 of the Law for Transparency and Orderly Regulation of Financial Services; 8, paragraphs third and sixth, 10; 12 in relation to 19, fraction IX, and 17, fraction I of the Internal Regulations of the Banco de México, which provide for the authority of this Central Institute, through the General Directorate of Central Bank Operations and the Central Bank Operations Directorate, respectively, to issue provisions; Unique, fractions I and IV, of the Agreement on the Affiliation of the Administrative Units of the Banco de México; and in the letter from the Ministry of Finance and Public Credit number 305.-016/2010, dated February 9, 2010, whereby it instructs the Banco de México in its referred capacity to carry out the necessary acts for the implementation of the Syndicated Placement of Government Securities method, has resolved to issue the following:

RULES FOR THE SYNDICATED PLACEMENT OF GOVERNMENT SECURITIES

1. Definitions For brevity, in singular or plural, for the purposes of these Rules, the following shall be understood as: Bank: the Banco de México acting in its capacity as financial agent of the Federal Government; Bondes: the Development Bonds of the Federal Government of the United Mexican States denominated in national currency; Bondes D: Bondes with a revisable interest rate; Bonds: Bondes with a fixed interest rate; Syndicated Placement: the process of selling Government Securities in the primary market in which Lead Distributors participate; Business Day: the days of the week, excluding Saturdays, Sundays, and other days on which credit institutions and securities companies are obliged to close their offices and branches, in terms of the general provisions issued to that effect by the National Banking and Securities Commission; Lead Distributors: the Market Makers designated by the Ministry to act in such capacity, who enter into the corresponding contract with the Bank; Market Makers: credit institutions and securities companies that act in such capacity in accordance with the provisions of Letter No. 305.065/2008, issued by the Ministry and made known through Circular 20/2008 issued by the Bank and any letters or circulars that modify or replace them; Indeval: S.D. Indeval Institution for the Deposit of Securities, S.A. de C.V.; Ministry: the Ministry of Finance and Public Credit; Udibonos: the Development Bonds of the Federal Government of the United Mexican States denominated in UDIs; UDIs: the unit of account, whose value in national currency is published by the Banco de México in the Official Gazette of the Federation, in accordance with Articles Third of the "Decree establishing the obligations that may be denominated in investment units and reforming and adding various provisions of the Federal Tax Code and the Income Tax Law" published in the Official Gazette of the Federation on April 1, 1995, and 20 Ter of the Federal Tax Code; and Government Securities: Bondes and Udibonos, jointly or separately.

2. Bidders Only Lead Distributors may be bidders, who must submit their bids on their own account.

3. Notices The Bank shall notify Lead Distributors of the notices for Syndicated Placements at least one Business Day in advance of the date of the respective auction, through its electronic page on the worldwide network (Internet) identified by the domain name: www.banxico.org.mx or through any other electronic, computing, or telecommunications medium authorized for this purpose by the Bank. In such notices, among other characteristics, the date and time of the corresponding Syndicated Placement, the deadline for submitting bids, the maximum amount, the Government Securities subject to the Syndicated Placement, and the settlement date will be indicated.

4. Bids Lead Distributors may only submit one bid for each Government Security. To this effect, they must submit them to the National Operations Department of the Bank, located at Avenida 5 de Mayo number 6, First Floor, Centro Neighborhood, Cuauhtémoc Delegation, C.P. 06059, Mexico City, in a closed envelope accompanied by a cover letter using the model attached as an Appendix within the time frame established in the notice. The bids must be signed by duly authorized representatives and the letter must show the signature authorization granted by the Bank's Cash Account Operations Office, so that said signatures must be previously registered in the aforementioned office. The bids may also be submitted through any electronic, computing, or telecommunications medium authorized by the Bank. The access, identification, and, where applicable, operation keys established for the use of electronic computing or telecommunications media will substitute the autograph signature with an electronic one, so that documentary or technical records in which they appear will produce the same effects that the laws grant to documents signed by the parties and, consequently, will have equal probative value.

5. Limit of Bids The bid submitted by each Lead Distributor must not exceed the maximum amount established in the relevant notice; bids received that exceed said amount will not be considered in the Syndicated Placement in question.

6. Effects of Bids Bids submitted to the Bank are irrevocable and will produce the broadest effects corresponding in law, implying the Lead Distributor's acceptance of these Rules, as well as the terms and conditions provided in the notice of each Syndicated Placement in which it participates. The Bank may cancel, in whole or in part, bids that do not comply with these Rules, are not clearly legible, have erasures or corrections, or are incomplete or incorrect in any way. Likewise, the Bank may reject bids regarding one or more issuances if, in its judgment, their participation, due to their characteristics, could produce inconvenient effects on the objectives of credit regulation, financing for the Federal Government, or the healthy development of the securities market in particular or the financial market in general. Additionally, the Ministry may declare any Syndicated Placement void, in which case no bid will receive an allocation.

7. Allocation Bids will be ordered according to the descending order of the corresponding unit prices and will be allocated at the single price determined by the Ministry, without exceeding the amount indicated in the notice. In the event that the sum of the bids receiving allocation exceeds the amount established in the notice, they will be attended to pro rata.

8. Results The Bank will inform, no later than sixty minutes after the deadline for submitting bids, each Lead Distributor individually of the quantity of Government Securities, if any, that have been allocated to them and the total price they must cover for them. The Bank will make the aforementioned report known through any electronic, computing, or telecommunications medium it determines for such effect. This is without prejudice to the Bank making available to all Lead Distributors, through its electronic page or through any other electronic, computing, or telecommunications medium authorized for this purpose by the Bank itself, no later than sixty minutes after the deadline for submitting bids, the general results of the placement. The information corresponding to the general results will remain available to bidders through the aforementioned medium, until the results of a new placement are incorporated in the terms indicated above.

9. Delivery of Government Securities and Payment of Their Price The Bank, pursuant to Article 2312 of the Federal Civil Code, reserves ownership of the Government Securities subject to the sale until the moment the corresponding price payment is made. The payment and delivery of the allocated Government Securities will be through Indeval in terms of what is provided in its internal regulations. The delivery will be made on the placement date established in the notice, through the corresponding deposit into the account that Indeval maintains for each Lead Distributor. To determine the national currency amount of the allocated Udibonos, the applicable equivalence on the settlement date of such securities, announced by the Banco de México, will be used, in terms of what is provided in Articles Third of the "Decree establishing the obligations that may be denominated in investment units and reforming and adding various provisions of the Federal Tax Code and the Income Tax Law" published in the Official Gazette of the Federation on April 1, 1995, and 20 Ter of the Federal Tax Code. In the case of placements of Government Securities issued prior to their placement date, the settlement thereof must be made by adding to the assigned unit price, the unpaid accrued interest, from the date of their issuance or last interest payment, as applicable, until the settlement date, according to the following formula:

I dev = VN x (c x d) / 36000

Where: I dev = Accrued interest in UDIs for the case of Udibonos, or in national currency for the case of Bondes. VN = Nominal value of the title in UDIs for the case of Udibonos, or in national currency for the case of Bondes. d = Days elapsed between the date of issuance or last interest payment, as applicable, and the settlement date. c = Annual interest rate of the title expressed in percentage terms and rounded to two decimal places.

In the event that a bidder does not make the total payment of the Government Securities allocated to them, the Bank will proceed in terms of what is provided in the contract signed with the Lead Distributors.

APPENDIX MODEL BID FOR THE SYNDICATED PLACEMENT OF GOVERNMENT SECURITIES

"Mexico City, ___ of _________ of ___. BANCO DE MÉXICO National Operations Department Avenida 5 de Mayo No. 6, First Floor, Col. Centro, C.P. 06059, Mexico City.

LEAD DISTRIBUTOR'S CORPORATE NAME: ____________________ INSTRUMENT: ISSUANCE KEY: TERM (in days): Clean Price 1/ AMOUNT IN THOUSANDS OF PESOS/UDIs: 2/

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ONLY ONE BID MAY BE SUBMITTED PER INSTRUMENT 1/: The price must be expressed up to five decimal places. Clean price is understood as that which does not include unpaid accrued interest. 2/: Amount at nominal value in amounts rounded to five thousand pesos or UDIs, or multiples thereof.

This request is mandatory and irrevocable and will produce the broadest effects corresponding in law, and implies our acceptance of the "Rules for the Syndicated Placement of Government Securities," made known through Circular 7/2010 dated February 10, 2010, as well as the terms and conditions provided in the notice of each particular placement.

Sincerely, (Name, position, and autograph signature of the official(s) of the Lead Distributor, with signature(s) registered at the Banco de México)"

TRANSITORY SINGLE. This Circular will enter into force on February 11, 2010.