Mexican corporate bond issuers could face difficulties in the coming weeks due to the uncertainty around US President-elect Donald Trump’s proposed renegotiation of the North American Free Trade Agreement (NAFTA).
Any amendments to NAFTA or other increased trade protectionism measures “pose varying degrees of credit risk to Mexican corporate bond issuers,” Fitch Ratings said in a report.
Local telecommunications companies América Móvil and Axtel, along with home appliance retailer Famsa and television network Televisa, have significant exposure to the slump of the Mexican peso against the dollar, Fitch said.
The spread on Televisa’s 2026 bonds widened this week to a G-spread of 192bp from 186bp before the US presidential elections on November 8, a debt capital markets source said. The notes were offering 104.114, or a yield of 4.07%, the equivalent of 185bp over US Treasuries.
Mexican real estate investment trusts Fibra Terrafina and Fibra Uno are also exposed to potential protectionist measures due to their ownership of industrial parks, which serve multinational companies and Mexican exporters, Fitch said.
Terrafina’s 2022 notes offered yields of 5.44% on November 15, or a cash price of 99, the DCM source said. The REIT’s 2022s have widened some 50bp since the elections last week, trading at a G-spread of 360bp.
Home appliances manufacturer Controladora Mabe, which sends roughly 30% of its exports to the US, is another corporate bond issuer from Mexico that could be hurt by trade tariffs, Fitch said.
Despite Mabe’s exposure to protectionist measures, the company’s 2019s offered a cash price of 110.75, or a yield of 3.96%, down some 25bp during the past week to a G-spread of 271bp, the DCM source said.
However, autoparts manufacturer Nemak saw its 2023 notes yield 6.48%, or a cash price of 95, at a G-spread of 458bp, roughly 180bp wider since the US elections.