Mexico

Mexico's year-on-year inflation likely accelerated in February after cooling slightly over the previous two months, a Reuters poll showed on Friday, reinforcing expectations that the central bank will continue to raise its key interest rate, Reuters reported. The consensus forecast of 11 analysts surveyed was for inflation to grow to 7.23% from 7.07% in January. If the prediction is correct, it would be the first increase since November, when inflation hit a 20-year high.

After posting a loss for the fourth quarter, Credito Real said it was seeking to avoid a messy legal battle with creditors and would work to keep the company running following a default earlier this month, Bloomberg News reported. The lender that focuses on payroll loans posted a loss of 359.4 million pesos ($17.7 million) in the fourth quarter as cash levels dwindled to around $30 million. Credito Real failed to pay a 170 million Swiss franc ($184 million) bond due Feb. 9. After huddling with more than 100 representatives from creditors on Feb.

Mexico’s economy narrowly avoided recession in 2021, as manufacturers adjusted to supply chain snarls and shortages amid a lack of fiscal stimulus, Bloomberg News reported. Gross domestic product stayed unchanged in the fourth quarter from the previous three-month period, better than the median estimate for a 0.1% decline in a Bloomberg survey, according to final data released by Mexico’s statistics institute Friday. Preliminary data last month had showed GDP falling 0.1%, which followed a 0.4% third-quarter contraction.

Mexico’s Unifin Financiera SAB said it placed the full amount it sought to raise in the local debt market on Thursday as it faced a test of confidence among investors following the default of another Mexican non-bank lender, Bloomberg News reported. The equipment leasing company sold 3 billion pesos (about $145 million) in one-year notes, according to a filing with the stock exchange. The notes have a variable rate of Mexico’s interbank rate plus 1.4 percentage points and total demand was for 3.08 billion pesos.

A group of Credito Real SAB bondholders has engaged Los Angeles-based investment bank Houlihan Lokey Inc. to help advise them in restructuring talks with the Mexican shadow lender, Bloomberg News reported. Credito Real has begun to reach out to bondholders and is expected to begin restructuring talks with them shortly, one of the people said. Doubleline Capital LP is among the firms with a sizable position in Credito Real’s bonds, said the people, who asked not to be identified because they aren’t authorized to speak publicly.

Expected interest rate hikes by the U.S. Federal Reserve put "limits" on Mexico's monetary policy, Bank of Mexico Deputy Governor Jonathan Heath said on Thursday at a business summit, Reuters reported. Due to the close relationship between the U.S. and Mexican economies, the Bank of Mexico's monetary policy decisions could not go counter to those of the Fed, he said. Heath said that Mexico is currently seeing low levels of private investment, hampering an economic recovery.

Mexico’s financial industry will need to embrace transparency and accounting disclosure to rebuild the confidence of investors rattled by Credito Real SAB’s missed bond payment, according to Moody’s Investors Service, Bloomberg News reported. The non-bank lender’s failure to repay holders of 170 million in Swiss franc ($184 million) bonds last week will be a drag for market peers -- especially those that have limited financial flexibility or bondholder protection, analysts Felipe Carvallo and Luis Fernando Baza said in a report.

Coinbase Global on Tuesday said it is launching a pilot program to allow cryptocurrency recipients in Mexico to cash out their funds in pesos, a move aimed at shaking up the $700 billion global remittance market, Reuters reported. Cryptocurrencies such as bitcoin are seen as an important way for people to send money to family and friends overseas because of the borderless nature of crypto and fewer intermediaries than traditional currency transfers.

Mexican payroll and business lender Credito Real SA B de CV said its planned refinancing of a 170 million Swiss franc bond, worth $184 million, hadn’t materialized, pointing to a possible nonpayment and restructuring ahead for the embattled shadow bank, WSJ Pro Bankruptcy reported. Credito Real has until the end of Wednesday to repay or refinance the outstanding bond, or could be deemed in default. Failure to pay would likely trigger a cross-default on other debt obligations, including the company’s dollar-denominated bonds.

Mexico raised its key interest rate by a half-percentage point for a second consecutive meeting as policy makers look past an economy in recession to address inflation near a two-decade high, Bloomberg News reported. In the first monetary policy meeting led by new Governor Victoria Rodriguez Ceja, the central bank raised the benchmark rate by a half point to 6% on Thursday. The increase matched the forecasts of 19 of 22 economists surveyed by Bloomberg, with three analysts anticipating a quarter-point hike.