Key is identifying corporate beneficiaries of the current economic and political backdrop
We recently spent several days traveling through Mexico City and Monterrey meeting with corporate bond issuers across a wide swath of sectors. While the overall message was mixed, the meetings support our constructive view of Mexican corporate credit. The current economic backdrop of solid US growth, a weak Mexican peso and low energy prices — coupled with progress among Mexican corporates toward meeting developed market standards of corporate governance and operations — provides a positive fundamental backdrop over the longer term, in our view.
That’s not to say that the Mexican corporate credit story, especially in the intermediate term, fits neatly into a simple, positive narrative. The country is facing some headwinds, and there are winners and losers. In our view, understanding the current economic and political dynamic is critical to a successful investment strategy in the Mexican corporate space. Below we elaborate on the impact of several issues confronting Mexico.Continue