Inflation, slowdown and high rates, the three challenges facing Mexican issuers in 2023

There are three challenges facing the Mexican market of debt issuers in 2023: the economic slowdownthe inflation y high ratesanalysts from the rating agency agreed Fitch.

Each one will have a different impact on each segment, he qualified separately Alberto Morenosenior director of corporate finance at the agency.

The high inflation will continue to encourage rate hikes in the United States and Mexico, which could generate an additional challenge for issuers, he added separately Astra Castillosenior director of global infrastructure at Fitch.

And the senior director of public finance at the firm, Gerardo Carrillohighlighted that the states and municipalities that have a strong participation in their development of remittances or tourism will also be impacted by the depth of the recession in the United States.

By all participating in Fitch’s Credit Outlook 2023, Carrillo estimated that the depth and speed of the recession in the United States will translate into a slowdown in local and federal collections.

He qualified that local revenue is protected by the Fund for the Stabilization of the Income of the Federative Entities will compensate the risk, but it did observe that it will be a factor to be observed by the agency.

In the same event participated Alejandro Tapia senior director of Banks and Marcela Galicia senior director of non-banking financial institutions. Tapia said that the rating outlook for the banking and financial institutions sector is neutral for this yearbut did recognize a risk of the economic slowdown in the composition of the portfolios.

However, he qualified that, thanks to the good performance of the banks in 2022, they have flexibility to absorb risks representing slowdown and inflation.

The good performance of the banks to which he refers is the result of the high interest rates and the recovery of the consumer credit portfolio that opened up growth opportunities observed last year.

The scenario is not the same for non-bank financial institutions, he qualified separately Marcela Galicia senior director at the firm. Several of the institutions in the sector are anchored in the market and the high rates together with the expectation of higher increases are a risk factor for them.

He says that there is a difference between sectors according to the level of risk of each institution.

In 20 minutes the conference by Shelly Shetty, sovereign analyst for Mexico, will begin