The Daily Update - Mexico

Earlier this week, José Antonio Meade resigned from his position as Mexico’s Finance Minister and announced his intention to run for the nomination as the PRI (Institutional Revolutionary Party) candidate for the 2018 Presidential Elections.  The PRI party nominated candidate is due to be announced in February 2018.  Interestingly, Meade is not a PRI party member but his reputation as an extremely capable candidate (having served in roles in Finance, Energy, Foreign Affairs and Development) and one who is honest and has integrity is a positive.

Corruption and violence remains a key voter concern and there is clearly room for improvement in Mexico: the 2016 World Bank Control of Corruption Index scores Mexico poorly at 23 compared to Chile at 82.  (The index gives a percentile ranking measure showing the percentage of countries ranking below the scored country.)  The other attraction of Meade’s candidacy is that he may appeal to a broader spectrum of voters beyond the PRI hard-line supporters as he has served in office under a PAN (National Action Party) administration as well.  This may be important as a recent Universal and Buendia & Laredo opinion poll showed Andrés Manuel López Obrador (often referred to as AMLO), the hard left candidate, leading at 25% followed by 19% for PAN and 16% for the PRI.  A poll by GCE after Meade’s resignation showed 23.2% of respondents support him closing the gap against AMLO at 28.7% of the vote. 

José Antonio González Anaya will leave his position as CEO of Pemex and take the position as the new Finance Minister.  He in turn will be replaced by Carlos Treviño as the new CEO of Pemex.  Treviño is a senior executive at Pemex and as part of the team putting the transformation program in place thus is seen as a bringing continuity.

We continue to like Pemex, Mexico’s government owned oil producer: Pemex 6.625% 2035 trades on a yield of 5.8% and 4.2 credit notches cheap using a best BBB+ rating.

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