STRENGTHS

THREATS

WEAKNESSES

OPPORTUNITIES THREATS

JULY2019

• Cross-border stock and local bond markets remain active in the face of domestic political and economic uncertainty.

• Mexico’s markets are liquid and issuances are expected to rise for the latter half of 2019 and into 2020.

• The private energy sector is experiencing some growth following the postponement of public sector auctions.

• There is increased appetite for loans and M&As amongst the local and international banks.

• Mexican corporates are looking at Asian investment as an alternative funding source to MXN/USD.

• Issuers and investors are looking for complex, well-structured transactions to kick-start market activity.

• Mexico’s ESG and sustainable finance markets are developing which presents issuers and investors with an opportunity to capitalise on the additional liquidity.

• Private equity investors are looking to import equity structures into the bond market.

• An uncertain political climate and a dip in investor confidence are leading to a slowdown in debt capital market activity and a lack of new capital inflows into Mexico.

• The real estate and oil and gas markets are at a standstill, which means that sourcing alternative funding for these sectors remains a challenge.

• Pricing volatility and lack of new bond placements is making issuers hesitant to come to market.

• Mexican issuers have to wait for windows of opportunity to access the capital markets, and even then favourable rates and pricing are hard to find.

• 2020 US elections, developing USMCA negotiations and trade tensions will impact pricing and automobile manufacturing in Mexico, the extent to which will depend on how Mexico chooses to align itself.

• Mexico’s rating downgrade, coupled with the potential refinancing of Pemex will have a huge impact on the local market and deter other companies from issuing.

• With uncertainty surrounding state-owned CFE’s potential conversion into electricity generator, Mexican developers want to understand how to continue attracting long-term investment into the energy sector.