High Costs Put Squeeze on Mex Industrials

High energy and raw materials prices are putting the squeeze Mexico’s industrial sector, according to JPMorgan, putting pressure on certain credits. Paper and packaging producer Durango is struggling with its balance sheet. “Liquidity is likely to continue to deteriorate, which could put pressure on the company’s ability to meet coupon payments in the medium term,” the shop says. Durango has been targeting $20m in asset sales to raise cash, JPMorgan notes, likely to be followed by more beginning next year. Homebuilder DesMet is likewise expected to have difficulty meeting revised forecasts, due to falling short of construction targets. “We recommend investors remain on the sidelines on this name until a clearer picture emerges,” JPMorgan says of DesMet’s 10.875% 2017 issue.