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  • Morning Call

    August 14, 2020

    After three unanimous decisions, Mexico’s Central Bank Board decided—in a split vote—to cut the key interest rate by another 50 bps, taking it to 4.5%. The dissenting vote called for a level of 4.75%. Although more prudently, the Central Bank left the door open for further cuts, mentioning that “Looking ahead, the available room for maneuver will depend on how the factors that have an impact on the outlook for inflation and its expectations evolve, including the effects that the pandemic could have on the latter two”. As such, we expect the policy rate to stay at the current level for the rest of the year, resuming the easing path in early 2021.

     

    AEROMEX announced it formalized with Apollo Global Management commitments for up to US$1.0 billion in debtor-in-possession (DIP) financing subject to court approval, of which US$800 million will be convertible. The funds give a respite to the airline, providing it with sufficient liquidity to sustain their operations during the Chapter 11 process and the recovery of passenger volume.

     

    Blackrock in consortium with PINFRA presented the only proposal for the improvement and operation of the Cancun-Tulum highway. The result of the tender will be announced on August 31.

     

    • The Mexican government proposed to the United States extending for another month the restrictions on nonessential travel through the border between the two countries until September 21.

     

    • According to Moody’s, the unemployment derived from the COVID-19 crisis could harm Mexican pension funds, as unemployed workers have stopped paying their contributions and are tapping their savings accounts.

     

    • Mexico’s agri-food trade balance reached a surplus of US$7.5 billion in 1H20 (+19% YOY), where exports amounted to US$20.7 billion (+4.3% YOY).

     

    • Mexico’s Ministry of Health reported that total confirmed COVID-19 cases in the country climbed by 7,371 vs. the previous day (+1.5%) to 505,380 while the death toll rose to 55,293 (+1.1%).