Fitch: Negative Headwinds Building for Mexican Corporates

Fitch Ratings has published a special report titled 'Mexican Corporates Rating Outlook Update'. The report explores the change in bias of the Rating Outlook to Negative from Positive for Mexican Companies, gives and overview of first quarter results and highlights things to watch in the future that can affect credit quality.

"The Rating Outlook continues to be Stable for Fitch's portfolio of international and national scale publicly rated Mexican corporates, but the bias since September has turned to negative from positive," said Sergio Rodriguez, Senior Director and Co-head of Fitch's Mexican corporate group.

As of May 15, 2015, 86% of issuers have Stable Outlooks, 5% Positive and 9% Negative. Increased M&A activity has pressured ratings, as the vast majority of acquisitions have been funded with debt.

First quarter operating trends were favourable, although free cash flow was relatively unchanged. Leverage increased during the quarter but remains at manageable levels when compared to other Latin American countries and liquidity remains sound. Good performance by exporters along with a better environment for consumption than the previous year balance against lower oil prices and sluggish economic growth.