IMF approves smaller $61 billion credit line for Mexico


11/25/19 – Reuters

By Andrea Shalal, Anthony Esposito

The International Monetary Fund said on Monday its executive board had approved a smaller two-year lending arrangement for Mexico worth $61 billion, replacing the current flexible credit line of about $74 billion.

It said the new arrangement would bolster market confidence at a time when trade uncertainty, a sharp pullback in capital from emerging markets and increased risk premiums posed continued external risks to the Mexican economy.

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IMF Says Mexico Credit Line May Be Cut From Current $74 Billion


11/20/19 – Bloomberg

By Eric Martin and Patrick Gillespie

The International Monetary Fund’s board plans to vote on Mexico’s request to renew its flexible credit line, possibly for less than the current $74 billion, before it expires next week.

Mexico is interested in reducing the size now that there’s greater certainty around its trade relationship with the U.S., Alejandro Werner, the IMF’s Western Hemisphere director, said in an interview Wednesday at Bloomberg’s headquarters in New York. Werner said he expects the board’s decision before the current agreement expires Nov. 28.

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Citigroup’s Losses on Loans to Mexico Homebuilders May Increase

citigroupBloomberg News, 10/15/2013

Citigroup Inc. (C:US), the third-largest U.S. bank, may face more losses on loans to Mexico’s three largest homebuilders as defaults mount and officials of the Latin America nation dash hopes for a bailout.

About half of the $168 million in loan-loss reserves Citigroup set aside in the third quarter for Latin America will be used to cover souring loans made to those firms, Chief Financial Officer John Gerspach said today on a conference call. At the end of September, the bank had less than $300 million of the assets, mostly construction loans, he said.

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In Mexico, low-income homeowners watch their dreams crumble

House in OaxacaThe Christian Science Monitor, 6/26/2013

Mexico has one of the largest housing gaps in Latin America: More citizens need quality homes with access to infrastructure and services than currently exist. As more people move to urban areas in search of a middle class life, Mexico will need to build 8.5 million new homes over the next 12 years in order to meet demand, according to the Inter-American Development Bank. So why, then, do so many homes in Mexico sit empty?

Twelve years ago, this seemed like an unlikely outcome. The government was on a campaign to construct more affordable homes, with an eye toward expanding home ownership, boosting social mobility, and stimulating the economy. As a result, millions of homes were built. Some 4.3 million mortgages were issued by the government-backed lender, Infonavit, and its partners between 2001 and 2011. But there was a catch: Many of the homes bought with these loans were constructed on the fringe of urban areas and failed to meet minimum standards.

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Mexico offers 2 bln pesos in loans to help homebuilders

House in OaxacaReuters, 6/23/2013

A unit of Mexico’s development bank said on Sunday it will team up with credit unions to offer up to 2 billion pesos ($149.52 million) in loans to small and medium-sized homebuilders. The announcement came as Mexico’s three largest homebuilders, Geo, Urbi and Homex , were looking to restructure debt after sales of their homes slowed in recent years. Mexico’s Federal Mortgage Society said it was in the process of approving 15 credit unions to access its funding lines.

The loans will go to homebuilders that are developing homes under the government’s new housing policy, which prioritizes vertical developments close to urban centers, the statement said. Geo, Homex and Urbi took on heavy debt to buy up large swathes of land for housing projects outside of major cities. Their suburban developments have fallen out of favor in recent years, hurting home sales, as Mexicans are increasingly choosing to live closer to offices and schools.

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A new offering for Mexico’s hopeful college grads: student loans

education - pile of booksSmartPlanet, 6/4/2013

Unlike in the U.S., where student loans are run of the mill, few Mexicans have access to the financing that could help them pay for a college education. Mexicans aspiring to middle-class status increasingly see university education as a must. Yet an over-saturated public university system accepts just a fraction of applicants, and many aspirants lack the means to pay for private college. That’s where FINAE, an institution specializing in financing higher education, comes in.

In a credit market for higher education still in its infancy, FINAE is serving a population that traditional banks have mostly ignored: students who are the first in their family to attend college, whose families fall into a bracket with middle-class aspirations, if not income. Parents think about education like an inheritance, says Celia Guerra, director of financial aid at Mexico’s private Universidad Panamericana, which facilitates FINAE credits. She says parents tell her: “Since I don’t have money, all I can leave my children is an education so that they can get ahead on their own.”

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Mexico peso peers over precipice to much steeper fall

Share market prices shown on anReuters, 6/3/2013

Mexico’s peso could slide even further if convictions mount that the massive monthly U.S. monetary stimulus is nearing an end and lead to an exodus of foreign investors who have piled into Mexican markets. The dizzying slide in the currency, down about 7 percent in the past three weeks, came as investors worried the Federal Reserve might taper off on bond purchases in response to a better U.S. economy and job market.

Although such a move by the Fed should support Mexico and its exporters in the long term since the local economy moves in sync with its northern neighbor, the mere thought of rising market rates in the United States spooked investors who had pushed the peso to its highest in nearly two years in early May. Assets in Mexico, with its close ties to the United States, have been among the most popular investments to leverage cheap loans in developed currencies and the prospect of a Fed exit spurred the worst sell-off in Mexican bonds since late 2010.

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Mexico postpones financial reform presentation in political row

taxes -- counting coinsReuters, 4/23/13

The planned presentation on Tuesday of a reform of Mexico’s banking laws has been suspended due to disagreements among the main political parties, President Enrique Pena Nieto’s office said in a statement. Pena Nieto had been negotiating the banking overhaul under a pact he forged with leaders of the opposition to work together on major economic reforms, but cracks in the agreement have appeared due to a political dispute over election funding.

The opposition conservative National Action Party, known as PAN, said its leader Gustavo Madero would not attend the presentation after accusing Pena Nieto’s Institutional Revolutionary Party of using funds from the Social Development Ministry to help its chances in local elections in the state of Veracruz.

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Mexico: time to boost domestic demand

shopping in super marketFinancial Times, 4/22/13

If there were ever any proof of the need for structural economic reform in Mexico, you could do worse than to look at February’s retail sales, which came in far below expectations.

On Monday, the government’s statistics agency reported that sales were down 0.1 per cent in February compared with the previous month in seasonally adjusted terms, and a chilling 2.6 per cent down on figures for the same month last year. HSBC had predicted a 1 per cent increase, and Banamex, Citi’s Mexico arm, had expected a 0.5 per cent increase). All in all, that is the worst year-on-year fall in more than three years. So what’s going on?

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Mexico bank reform eases legal hurdles to boost credit

shutterstock_113478238Reuters, 4/21/13

Mexico’s government wants to boost lending by making it easier for banks to collect on guarantees for bad loans and by giving new powers to regulators to punish firms that do not lend enough, according to a draft of a new banking reform. The proposal, a copy of which was seen by Reuters, is due to be announced next week, and is part of a raft of measures designed to ramp up growth in Latin America’s second biggest economy.

Thrashed out within a pact made between President Enrique Pena Nieto and the leaders of the main opposition parties, the banking reform targets Mexico’s conservative banks, which boast high capital levels but lend much less than their foreign peers.

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