Fitch: Mexican Corporates Highly Exposed to Currency Weakness
Reports will be released daily through April 22nd as per the schedule at the bottom of this release.
"Excluding Pemex, hard-currency-denominated EBITDA accounts for 24% of aggregate EBITDA, while 74 % of debt is denominated in currencies other than the Mexican peso," said Gilberto Gonzalez, Associate Director at Fitch. "Peso depreciation does seem overextended. A strengthening of the Mexican peso to levels closer to parity would result in a net leverage reduction to the median corporate by more than 0.1x."
Through derivatives, Mexican corporates have minimally reduced the proportion of their debt denominated in dollars in aggregate to 74% from 76%.
The most FX-sensitive credits include Famsa, TV Azteca, Comision Federal de Electricidad and Cemex. These issuers would stabilize the fastest under peso levels closer to purchasing power parity.
The LatAm Corporate FX Risk series will be released as follows:
April 18: Brazilian Corporate FX Risk - Prevalence of Natural Hedges and Derivatives
April 19: Chilean Corporate FX Risk - Depreciation Impact Positively Skewed
April 20: Colombian Corporate FX Risk - Losers Outweigh Winners
April 21: Mexican Corporate FX Risk - Highly Exposed to Currency Weakness
April 22: Peruvian Corporate FX Risk - Portfolio Positioned to Benefit from Currency Depreciation