MARKETS
The S&P / BMV IPC plunged 4.0% during the week, joining the significant correction in the US equity indices, after the FED’s more cautious view on additional interest rate cuts after the 25bps reduction this week tempered the previous weeks’ optimism. The Mexican peso slipped 0.5% to MXN$20.31/USD while the yield of the Mexican 10-year M-Bono was up 40 bps to 10.33%.
The S&P / BMV IPC’s saw very few gainers, with CEMEX CPO up 2.0% and WALMEX* close by at +1.6%. The index’s biggest losers were in the double-digits: PEÑOLES * (-17.6%), ORBIA * (-16.0%) and GFINBUR O (-9.4%).
Next week, we expect the following macroeconomic indicators: inflation rate, trade balance, and IGAE.
LISTED COMPANIES
GCARSO announced an agreement with Talos Energy Inc. (TALO), ending the dispute that started when Control Empresarial de Capitales (“CEC”, a Slim-controlled company) began accumulating shares in TALO, eyeing a potential hostile takeover. Following this agreement, GCARSO, through its subsidiary Zamajal, will take control of Talos México (T-MX), increasing its stake to 80% from 49.9%; T-MX owns a 17.4% interest in the Zama oil field. TALO will receive US$49.7 million in cash at closing, with an additional US$33.0 million due upon first commercial production from the Zama Field, for an aggregate price of US$82.7 million. The transaction is subject to regulatory approvals. On the other hand, CEC has agreed to limit its equity interest in TALO (currently at 24%) to 25% for the next twelve months; for its part, TALO agreed to terminate the poison pill plan it adopted when CEC began accumulating TALO’s shares.
COFECE published more details in its ruling on Walmex’s alleged anti-competitive practices, with the stock giving up most of Friday gains when details became known. In addition to a lower than expected $4.6M fine made public last Friday, COFECE barred Walmex from: Retaliating against suppliers for working with competitors; Imposing price demands to gain unfair advantages; Requiring suppliers to disclose terms offered to others; Adjusting invoices without supplier consent. Walmex must also: Revise policies to comply with COFECE’s order; Create a reporting system for vendor complaints; Launch an anti-trust program led by a senior officer.
VINTE acquired a 99.92% equity stake in JAVER, becoming Mexico’s largest social housing developer. The company paid MXN$4.29 billion, of which 55% was financed with debt and the rest with the proceeds from a share issuance, in addition to a share exchange.
NORTE 19’s average daily rate increased 11.1% YoY to MXN$1,404 in November, reaching a new record high. The occupancy rate was 62.6%, down 0.4% YoY. As a result, RevPar was up 10.4% YoY to MXN$879, while total revenues grew 15.0% to MXN$393 million.
GENTERA’s subsidiary Banco Compartamos received a MNX$1.2 billion tax complaint from fiscal authorities due to alleged non-fulfilled tax obligations in 2015 and 2016. The company will appeal this determination.
FMTY successfully concluded the sale of an office property located in the city of San Pedro Garza, Nuevo León, for a total amount of US$15.0 million plus VAT. This transaction is part of FMTY’s divestment strategy, prioritizing the sale of underperforming properties.
SORIANA made an alliance with Fazt to open 1,000 super fast electricity charging stations by 2030 in the retailer’s parking spaces. They plan to open the initial 57 stations in Nuevo León, Mexico City, State of Mexico, and Jalisco in 2025.
VESTA closed the previously announced US $545 million Global Syndicated Sustainable Credit Facility which comprises a US $345 million term loan available through two tranches, for three and five years, with an 18-month availability period, and a US$200 million Revolving Credit Facility. The IFC, BBVA, Citigroup, and Santander acted as Joint Lead Arrangers.
NEMAK closed a 5-year US$200 million green loan facility with a variable SOFR-based interest rate, which will be used to refinance existing debt. This transaction extends the loan’s maturity from 2027 to 2030. The refinancing was structured as a club deal green loan involving two financial institutions that participated in the original 2022 agreement.
FSHOP paid off the outstanding balance of La Perla Life Center loan with proceeds from the syndicated loan it raised in November with a group of banks led by BBVA.
GRUPO ROTOPLAS’ shares were included in the Dow Jones Sustainability Index (DJSI) following the December 13th rebalancing.
INTERCERAMIC announced that its shares were de-listed from the MSE on December 6th after receiving authorization from the CBNV.
TLEVISA’s cable TV unit izzi will stop broadcasting Televisión Azteca’s five satellite channels from January 1st, 2025.
OTHER COMPANIES
KONFÍO, a Mexican digital financial services company specializing in SMEs, obtained MXN$7.4 billion in financing from Goldman Sachs, JPMorganChase and Afore Sura Mexico. The company, which is currently awaiting government authorization to become a bank, plans to provide credit to 10 thousand SMEs.
LA COSTEÑA will acquire 100% of cookie producer Mac’Ma, according to local newswires. The transaction is subject to the approval of local authorities and Grupo Mac’Ma’s shareholders.
TRADE AND ECONOMICS
The Mexican government announced the implementation of tariffs on textile products, in response to pressure from local producers and anticipating concerns from the incoming US government on Mexico becoming overly receptive to Chinese imports. It will temporarily increase to 35% the tariff on 138 types of manufactured goods, and to 15% on 17 types of textile goods imported from markets with no free trade agreements with Mexico. The government also increased the list of products that cannot be imported through the Manufacturing, Maquiladora and Export Services Industry Program until April 2026.
Banco de Mexico Governing Board unanimously decided to cut the key interest rate by 25 bps to 10.0%, as broadly expected according to last Citibanamex Expectations Survey. Looking ahead, the institution expects the inflationary environment to allow further reductions in the benchmark interest rate, with the potential of downward adjustments of a greater magnitude at some meetings.
S&P Global Ratings affirmed its ‘BBB’ long-term foreign currency and ‘BBB+’ local currency sovereign credit ratings on Mexico. The outlook remains stable. It also affirmed its short-term sovereign ratings at ‘A-2’. It maintained its ‘A’ transfer and convertibility (T&C) assessment unchanged. In its press release, the ratings agency mentioned that “the stable outlook reflects our expectation that cautious macroeconomic management, including prudent monetary policy and a return to low fiscal deficits, will stabilize Mexico’s public finances and debt level over the next two years. We believe that potential disputes between Mexico and the United States over trade, immigration and other issues will be managed in a pragmatic manner that underpins economic stability and maintains the deep economic integration between the two countries.”
The Senate approved the controversial Infonavit Law reform, with the Chamber of Deputies yet to vote. The bill contemplates the creation of a construction company to develop one million social interest homes during the current presidential administration and the implementation of a social leasing scheme with purchase option for workers with a monthly payment of no more than 30% of their salary. The General Assembly will be reduced from 45 to 30 members, and the Board of Directors from 15 to 12. The Government will have more decision power with 3 out of 5 representatives in the Audit and Transparency Committees, and 5 out of 9 representatives in the Supervision Commission, while Infonavit’s CEO (appointed by the President) will have veto power on the committees’ decisions. The proposal has faced backlash from both the business and labor sectors, claiming it affects the Institute’s original tripartite scheme and gives the government full control of MXN$2 trillion (US$100 bn) in workers’ contributions managed by the institute. Ricardo Monreal, Morena’s majority leader in the Chamber of Deputies, said that the law’s analysis and eventual approval will take place in January 2025, ruling out an extraordinary legislative period to allow for a “profound deliberation”.
Aggregate demand and supply increased 1.2% QoQ (seasonally adjusted) in 3Q24, the strongest figure in the last six quarters. Exports were up 5.1%, followed by private consumption and investment with a 1.1% rise, while the government’s consumption was 0.3% higher. Aggregate supply and demand advanced 2.3% YoY (original data), accelerating against the previous two quarters. It was driven mainly by an 8.0% export growth, a 3.0% increase in private consumption and a 1.8% rise in the government’s consumption.
Economists expect Banco de Mexico to reduce its key interest rate to 8.50% (from 8.0% in the previous survey) in 2025, according to the Citibanamex Expectations Survey. They also foresee an inflation rate of 4.33% (from 4.38%) in 2024 and 3.90% (from 3.83%) in 2025; GDP growth of 1.6% in 2024 and 1.2% in 2025 (in both cases unchanged); and a YE FX rate of 20.25 (from 20.23) in 2024 and 21.0 (from 20.50) in 2025.
Economists expect an inflation rate of 4.36% for 2024 and 3.86% for 2025, according to Banco de Mexico’s monthly survey. This compares against 4.42% and 3.84% in the previous survey. They also expect a core inflation rate of 3.63% (from 3.69%) in 2024 and 3.68% (from 3.69%) for 2025; a GDP growth of 1.55% (unchanged) for 2024 and 1.17% (from 1.23%) for 2025; a YE FX rate of 20.24 (from 20.22) for 2024 and 20.69 (from 20.71) for 2025; and a YE Banco de Mexico interest rate of 10.0% (unchanged) for 2024 and 8.31% (from 8.20%) for 2025.
CETES auction: 28-day CETES 15 bps to 9.80%; 91-day CETES +4 bps to 9.84%; 175-day CETES -9 bps to 9.76% and 707-day CETES -9 bps to 9.99%.
Download PDF: MI-MxMkt-122024