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Energy
Congress Approves Watered Down Oil Reform Bill
October 28, 2008
Congress has approved in general terms an oil reform bill that includes controversial plans to allow private investment in Pemex. The bill, which is a watered down version of President Calderon's original proposal, allows deepwater exploration only on a direct contractual basis, instead of paying private firms a bonus for any oil they find. It also would not allow private investment in the building and operating of oil refineries. President Calderon hailed the vote as an "historic achievement.”
SENER: Oil Reform Will Boost GDP, Exploration In Deep Waters, Employment
October 29, 2008
Energy Minister Georgina Kessel said that the recently approved oil reform bill will assign blocks of territory to private contractors for exploration work, and that it should boost economic growth by 1%. Kessel said that hiring foreign companies for exploration will allow Pemex to extract oil from currently unexploited deepwater wells. Kessel also said the reforms will allow Pemex more flexibility to contract out work and could spur the creation of as many as 300,000 new jobs. However, Kessel and Pemex’s CEO said Mexico will continue to import as much as 45% of the fuel it uses in the coming years.
Oil Reform Restricts Ownership Of Oil By Foreign Oil Companies
October 30, 2008
The oil reform bill that was recently passed by Congress will keep the door shut on foreign oil companies eager to extract oil as it does not let Pemex sign production-sharing agreements with outside firms. The new law continues the long-standing prohibition on private firms owning the country’s oil and natural gas resources. However, Pemex said that it has maintained regular contact with foreign oil firms on potential oil projects under the country's new legal framework.
AMLO Seeks Changes Ahead Of Oil Vote
October 28, 2008
Mexican opposition leader and former presidential candidate for leftist opposition Democratic Revolution Party (PRD) Andres Manuel Lopez Obrador (AMLO) spoke in Congress to demand more restrictions on private oil contracts on the now passed oil sector reform. AMLO wanted to go further and have the reform spell out that foreign firms cannot have exclusive rights to development blocks.
Pemex Reports 3Q Losses Of MXN 14.4 Billion
October 28, 2008
Pemex reported a larger third quarter loss despite sharply higher oil prices as oil production tumbled. Pemex said its 3Q loss widened to MXN 14.4 billion from MXN 13.7 billion in the year-ago period. Pemex’s crude oil production fell 9.8% to 2.755 million barrels per day (b/d), largely due to declines in output at its Cantarell oil field. Export volumes declined 23.8% to 1.287 million b/d.
SENER: Mexico To Launch New Oil Contracts In Late 2009
October 29, 2008
Energy Minister Georgina Kessel said that it will take Mexico about a year to launch incentive-based oil exploration and production contracts that were recently approved as part of the oil sector reform bill. Under the bill, Pemex is allowed to use a bonus program to attract private investment. Pemex can offer contracted firms incentives for completing projects ahead of schedule, or if they are more successful than expected. Kessel said that they expect contracts to be launched toward the end of 2009.
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Trade & Investment
Mexico Launches Trade Dispute With U.S. Over Tuna
October 29, 2008
According to a document by the World Trade Organization (WTO), Mexico has launched a dispute with the U.S. over rules from that country that prevent tuna from Mexico from being labeled "dolphin-safe.” Mexico said U.S. measures prohibited Mexican tuna from being labeled as "dolphin-safe", even though the tuna was harvested in a way that conformed to "dolphin-safe" standards agreed by the Inter-American Tropical Tuna Commission. At the same time, Mexico complained that U.S. rules allowed similar tuna products from other countries to be labeled "dolphin-safe.”
WTO: U.S. Has Six Months To Fix Mexican Steel Charges
October 31, 2008
The World Trade Organization (WTO) said the U.S. has six months to bring its taxes on imports of Mexican steel in line with international commerce rules. The ruling follows a WTO appellate decision in April that found against Washington for imposing excessive dumping fees on stainless steel from Mexico. After April 30, 2009, Mexico can ask the WTO to launch a compliance investigation if it feels the U.S. is still breaking the rules.
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Banking, Insurance & Finance
Government Bonds Rally On Pension Fund Proposal
October 27, 2008
Government bonds rallied as investors bet safe-haven government debt will benefit from a proposal that will temporarily exempt pension fund managers (Afores) from making forced asset sales in times of market volatility. The Finance and Public Credit Ministry (SHCP) said it will reduce the number of long-term bonds it sells in 4Q, while increasing the number of short-term Treasury bills it sells. Other measures to address liquidity in the local market include buybacks of bonds from the bank savings protection institute IPAB, and a central bank interest rate swap program.
Bank Lending Loses More Steam In September
October 31, 2008
According to the central bank (Banxico), lending to Mexico's private sector continued to weaken in September, with loans up just 9.2% year-on-year amid slower growth across most loan categories. Banks' consumer credit, which includes credit cards, fell 27.6% in September over the year-ago period. Bank lending to the private sector grew 11.3% in August.
Delinquent Accounts Up 40% In September From June
October 28, 2008
According to a report by the National Banking and Securities Commission (CNBV), consumption credits’ delinquent accounts increased by 40% since June and amounted to MXN 37.53 billion in September. September’s delinquent accounts were up 49% when compared to the 2007 month’s results, which amounted to MXN 25.86 billion.
BBVA’s Mexico Subsidiary Contribution Amounts To 35% Of Firm’s Net Profit
October 29, 2008
BBVA Bancomer, the Mexican arm of Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA), contributed EUR 1.5 billion, or 35.4%, to the company’s worldwide net profit, which amounted to EUR 4.5 billion between January and September. BBVA Bancomer’s contribution to its parent company’s profit represents a 16.3% increase when compared to the year-ago period’s results.
Ixe Grupo Financiero To Merge Banks, Launch Credit Card JV In 4Q
October 29, 2008
Mexican banking group Ixe Grupo Financiero said that it plans to merge its two banking units and launch a credit card joint venture with JPMorgan Chase & Co. before the end of the year. Ixe said it will fold its consumer finance bank Banco Deuno into commercial bank Ixe Banco, which in the last four weeks has received a capital infusion of MXN 500 million from the group. The merger is expected to close during 4Q, pending regulatory approval and customary closing procedures.
Authorities Rule AXA Must Pay USD 20.8 Million To ACS
October 29, 2008
Authorities have ruled that French insurance company AXA’s Mexican subsidiary AXA Seguros must pay USD 20.8 million plus interest to U.S. engineered knitted wire mesh products manufacturer ACS Industries after AXA inherited such debt when it acquired Dutch insurer ING. ING owed the mentioned amount to ACS after a fire destroyed part of its plant at Guadalupe, in the state of Nuevo Leon, in 2004.
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Business & Industry
Stevanato Group Subsidiary Invests EUR 37 Million In Nuevo Leon
October 25, 2008
Italian conglomerate Stevanato Group announced that its Ompi of Americas subsidiary has inaugurated a EUR 37 million facility in the state of Nuevo Leon to produce glass cartridges and collection vials for the pharmaceutical industry. The new plant is expected to create approximately 260 direct jobs in a first phase and to produce some 370 million glass cartridges and 160 million collection vials.
Arca Invests USD 1.4 Billion In 2008
October 29, 2008
Mexican Coca-Cola bottler Embotelladoras Arca announced that it plans a total investment of MXN 1.4 billion this year. Arca said that it has invested MXN 1 billion so far in broadening its production capacity and acquiring more equipment. The mentioned investment does not include a recent acquisition of Mexican juice maker Jugos del Valle and some Argentinean operations.
American Standard To Invest USD 20 Million In Mexico
October 28, 2008
U.S. manufacturer of sanitary furniture American Standard announced a USD 20 million investment to expand its Mexico operations after its sales in the country amounted to USD 35 million in 2007. American Standard Mexico’s operations represent a 12% market share in the country and amount to 50% of all its production in Latin America.
GModelo Announces Possible Plans To Buy Back Shares From Anheuser-Busch
October 29, 2008
Mexican brewer Grupo Modelo (GModelo) has announced possible plans to buy back shares from U.S. peer and partner Anheuser-Busch (AB), after Belgian-Brazilian brewer InBev made a USD 52 billion offer to acquire a 100% stake in AB. GModelo has argued since a deal was inked this summer, that under a 1993 agreement governed by Mexican law, AB cannot transfer ownership of its half stake in GModelo without giving the latter the chance to buy itself back.
HSM Issues Mexico’s Best Brands 2008 Ranking
October 31, 2008
According to U.S. Multimedia Management Content company HSM’s ranking of Mexico’s Best Brands 2008, Sony electronics, Sabritas snacks, Coca-Cola, scotch whiskey Johnny Walker, Nokia cell phones, Aeromexico Airlines and computer maker Hewlett Packard were the best ranked among 321 brands and graded according to 21 categories. The ranking indicated that the said brands had a stronger link with Mexican consumers. In addition, the National Autonomous University of Mexico (UNAM) was ranked first among brands with the highest social responsibility.
Sigma Alimentos Acquires Butterball Unit
October 31, 2008
Mexican refrigerated and frozen foods company Sigma Alimentos announced it has acquired Longmont, a unit of U.S. turkey producer Butterball for an undisclosed amount. Sigma said that the purchase is part of its expansion plans in the cold meats market in Mexico. Sigma acquired cold meats maker Braedt’s operations in Peru in July.
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Automotive
Mexico To Restrict Imports Of Junk Vehicles From U.S., Canada
October 31, 2008
President Calderon said that his government will not allow junk vehicles from the U.S. and Canada to be imported into Mexico, since starting January 1, 2009, used cars of up to 10 years old will be allowed to freely enter Mexico under the North American Free Trade Agreement (NAFTA). Calderon said that requirements to comply with administrative and environmental regulations avoiding imports of junk will be met at all times.
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Housing & Mortgaging
Mexico Home Builders To Increase Dependence On Government Mortgages
October 30, 2008
According to a top executive from Mexican developer Urbi, Mexico's largest publicly traded home builders are increasing their exposure to the low-income housing market as government-sponsored lending programs make the segment less vulnerable to a cooling economy. President Calderon has made housing a priority sector with a goal of making six million mortgages during his six-year administration, which ends in December 2012.
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Construction & Infrastructure
Three States Propose Metropolitan Projects Requiring MXN 23 Billion Investment
October 28, 2008
The governments of the Federal District, the State of Mexico (Edomex) and the state of Hidalgo have presented a series of metropolitan projects that require an investment of MXN 23 billion to pursue or enhance works that began construction in 2007 and 2008. The projects also call for the construction of brand new roads, hydraulic infrastructure and environmental projects.
ICA Postpones Investments To Address Financial Crisis
October 31, 2008
Mexican builder Empresas ICA announced that it will postpone a few investment plans to address the world’s current financial crisis without altering its growth targets. ICA expects an increase of between 15% and 20% in its 2008 earnings, deriving from public infrastructure contracts and which will compensate for a weakening trend in its housing and airport development businesses.
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Retail
ANTAD Retail Group Sees 2008 Sales Down 1%
October 27, 2008
Mexican retailers association ANTAD said that it expects same-store sales to fall by 1% this year amid a sluggish economy. Mexico's economy is growing at a slower pace than expected due to the global credit crisis and a slowdown in the U.S. Sales at department stores are expected to fall by 5%, which is slightly offset by 1.5% growth in supermarket sales. Same-store sales at ANTAD members fell 0.1% during the first nine months of 2008, led by a 3.4% drop in department store sales.
Comerci Secures Loans To Pay Suppliers, Files Third Bankruptcy Petition
October 31, 2008
Mexican retailer Comercial Mexicana (Comerci) said that it has received MXN 3.33 billion in loans to guarantee payment to suppliers while the holding company renegotiates its debt. Comerci said the loans include a MXN 327 million bank loan and a MXN 3 billion credit line from government development bank Nafin. The loans are secured by Comerci’s real estate holdings, and all the money will be used to pay suppliers. Comerci has filed a third motion for bankruptcy protection in Mexico, after two previous requests were rejected by the courts.
Soriana Places MXN 800 Million In Debt
October 23, 2008
Mexican retailer Soriana has placed MXN 800 million in debt after the government announced it would offer USD 3.92 billion in loan guarantees through development banks Nafin and Bancomext to help Mexican firms refinance commercial debt and avoid a commercial credit crunch. The issuance is backed by Bancomext and Soriana adds to other firms that have employed the government’s guarantees, such as Coppel, Cemex, Unifn and Banregio.
Coppel To Invest USD 125 Million In Baja California Sur
October 29, 2008
Mexican retailer Coppel and investor John Pentz at Mexico Development Partners announced a USD 125 million investment plan to build a “The Shoppes at La Paz” mall in the state of Baja California Sur. The project is expected to create 1,000 direct jobs with construction beginning in early 2009. The mall will have over 4,000 parking spaces and will feature the presence of stores such as Liverpool, Soriana, Coppel, C&A, Costco, movie theatres and two hotels, among others.
FEMSA To Open 750 Oxxo Convenience Stores In 2009
October 28, 2008
Mexican conglomerate Fomento Economico Mexicano (FEMSA) announced that its convenience stores arm Oxxo has plans to open 750 establishments in 2009, a figure much higher than the one registered in 2007. FEMSA said its expansion plans remain unchanged as of now despite the world’s uncertain macroeconomic environment.
Sam's Club To Open Warehouse Club With Products From Mexico
October 28, 2008
U.S. retailer Wal-Mart Stores’ (WMT’s) Sam's Club unit announced plans to open a membership warehouse club in the U.S. with imported products from Mexico aimed at attracting Hispanic customers. The store, called Mas Club, is slated to open during the first half of 2009 in Houston. The club plans to offer groceries and will have its own gas station, which will be exclusive to members.
Office Depot De Mexico Rejects Gigante Acquisition Offer
October 29, 2008
Mexican retailer Grupo Gigante announced that its bid to buy U.S. office supply giant Office Depot's (OD’s) 50% stake in the two companies' joint venture in Mexico was rejected by OD. However, Gigante said that it is continuing discussions with OD to further consolidate and expand. The acquisition offer was presented July 30.
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Transportation
SCT Denies Concession Renewal For Avolar
October 28, 2008
The Communications and Transport Ministry (SCT) has refused to renew low-cost airline Avolar's concession to operate in Mexican airspace. The decision effectively grounds Avolar, which has clashed with SCT on a number of occasions in recent months. Avolar's four-year concession expired this month and SCT rejected an extension on the grounds that the airline could not prove necessary safety, quality and coverage conditions to keep flying.
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Telecommunications & Technology
SCT To Launch Tender For Mobile Telephony, Broadband Radio Spectrum
October 28, 2008
The Communications and Transport Ministry (SCT) announced that it will launch the first tender for radioelectric spectrum for mobile telephony and broadband services by the end of the year. SCT said that the tender will be protected by all legal means in order to prevent some operators from speculating and seeking court protection.
SCT: Telecommunications Infrastructure Requires USD 200 Billion Investment
October 28, 2008
According to an official from the Communications and Transport Ministry (SCT), Mexico’s lingering telecommunications infrastructure requires investment of approximately USD 200 billion to reach levels of development in the sector comparable to those of the U.S. Meanwhile, the Organization for Economic Co-operation and Development (OECD) said that Mexico has one of the poorest performances in scientific and technological development among the organization’s members.
America Movil 3Q Net Profit MXN 12.4 Billion
October 28, 2008
Mexican mobile telephony provider America Movil posted a 31.6% jump in net profit, which amounted to MXN 12.4 billion in the third quarter, helped by higher sales and lower depreciation and amortization charges. America Movil did not provide comparative figures. The company also said that it will put off any new acquisitions and likely forgo any end-of-year dividends due to the global financial crisis, even though it expects Latin America's economies to fare better than most.
Axtel Hires Comptel To Operate Number Portability
October 29, 2008
Mexican telecommunications company Axtel has hired Finnish dynamic software provider Comptel Corporation to operate number portability in Mexico, which was recently approved by authorities. Comptel said that Axtel is using its Comptel Convergent Mediation Solution and its Comptel Activation and Provision Solution to operate portability.
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Economy
SHCP: Economy Grows 1.7% In 3Q
October 31, 2008
The Finance and Public Credit Ministry (SHCP) said that Mexico's economy grew a modest 1.7% in 3Q although it was only mildly affected by turmoil in the world financial markets. SHCP said that employment rates, productivity and public spending "continue to grow in Mexico, albeit at more moderate annual rates than those observed in previous quarters.” The mining industry saw the biggest contraction at 5.3%. Mexico has revised its 2008 economic growth outlook to 2% from 2.4%.
Mexico Rejects Seeking Help From The IMF
October 31, 2008
Mexico ruled out asking the International Monetary Fund (IMF) for a loan, even though it plans to borrow more from other multilateral organizations. Recent rumors suggested the government might have been tempted to take advantage of its relatively large quota in the IMF to bolster financing for next year and offset the effects of the global financial crisis. Mexico has the equivalent of USD 4.6 billion with the fund.
Mexico Buys Back USD 3.15 Billion In Government Debt To Ease Liquidity
October 31, 2008
The government said it will buy back up to USD 3.15 billion in 10- to 30-year fixed-rate government bonds in a bid to boost liquidity and promote stability in financial markets. The Finance and Public Credit Ministry (SHCP) said that the measure is consistent with earlier steps to ensure orderly markets. The bonds are denominated either in pesos or in Investment Units (UDIS), an inflation-indexed financial instrument.
Remittances Seen Falling 2.5% To USD 23.5 Billion In 2008
October 29, 2008
According to the central bank (Banxico), remittances sent home by Mexicans living abroad will probably post modest growth in the fourth quarter, even though overall flows are seen falling to about USD 23.5 billion in 2008. Banxico said that although Mexican migrants living in the U.S. took advantage of a weakening peso and sent home more money in September, remittances will still fall an estimated 2.5% this year.
Oil Fund, Exchange Rate To Support 2009 Governmental Spending
October 31, 2008
The federal government expects a favorable exchange rate and savings in its oil stabilization fund to compensate for any shortfall in oil revenue next year if crude prices remain below forecast. In the event of a funding shortfall, the government could tap the oil stabilization fund, which will probably end the year with about MXN 56 billion in reserves, of which a significant percentage is denominated in dollars.
Banxico: Unaddressed Volatility Would Have Been A Catastrophe
October 31, 2008
According to the central bank (Banxico), if dollars would not have been auctioned to address volatility in the currency market, the peso (MXN) could have fallen to as low as MXN 20 per dollar (USD). Banxico added that if it had not auctioned the dollars, the country’s economic worries would have been catastrophic.
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Politics
U.S. Consul: About 4,500 U.S. Voters In Mexico Cast Early Ballots For President
November 2, 2008
U.S. consul in Mexico Karen C. Martin said some 4,500 U.S. citizens living in the Yucatan Peninsula in Mexico cast ballots ahead of the U.S. presidential election on November 4. Martin said that the U.S. citizens voted according to the electoral system of their origin-state. The number of citizens was calculated based on U.S. records of the citizens living in the states of Yucatan, Campeche and Quintana Roo, which form the Yucatan Peninsula in the Mexican Caribbean.
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Justice, Safety & Crime
Officers, Spy Leaked DEA, PGR Information To Beltran-Leyva Drug Cartel
October 27, 2008
The federal Attorney General’s Office (PGR) revealed that 35 law enforcement officials have been implicated in corruption cases and 6 of them have been charged with leaking classified information to the Beltran-Leyva drug cartel. Corrupt officers were paid USD 450,000 per month by the criminal group. Prosecutors added that the cartel may have paid a spy inside the U.S. Embassy for details of DEA operations. Authorities said that the man worked for Interpol at Mexico City's airport and at the U.S. Embassy and is now considered a protected witness. It is unclear if he is under Mexican or U.S. care.
Top Federal Police Chief Quits Amid Probe
November 1, 2008
Mexico's Federal Police top commander Gerardo Garay has quit amid allegations that drug gangs have infiltrated senior levels of crime-fighting agencies. Gerardo Garay said he was stepping aside to place himself at the orders of legal judicial authorities to clear up any accusation against him. Garay did not say what accusations he was referring to, nor were federal officials available to comment on the resignation. A local daily reported that prosecutors are looking into whether the federal police assigned to the Mexico City airport had aided drug traffickers.
Army Members Linked To Drug Cartel
October 31, 2008
Four military officers and one soldier are under investigation for alleged links to one of the country's most powerful drug cartels. The National Defense Ministry (SEDENA) said that the arrest of suspected drug lord Alfredo Beltran Leyva led authorities to investigate the five army members. All have been turned over to prosecutors.
Man Admits To Killing At Least Ten Women In Mexico
October 29, 2008
A man temporarily extradited from the U.S. has told a court he and two other men killed at least ten women in the Mexican border city of Ciudad Juarez, in the state of Chihuahua. Jose Granados acknowledged to a judge that they had taken drugs and killed the women between 1993 and 2006. He added that one of the killers had been in charge of making offerings to Satan. Granados said Edgar Alvarez, who was sentenced to 36 years in prison in one of the killings, masterminded the kidnappings and murders. Granados will be sent back to the U.S. to finish serving a three-year term for immigration violations while his trial continues in Mexico.
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Arts & Culture
Border Hispanics Infuse Day Of The Dead With U.S. Elements
October 31, 2008
The Hispanic community in El Paso honored their deceased loved ones with altars that reflect the cultural syncretism of that border area and which include offerings such as mole, tamales, tequila, hamburgers and refreshments. A spokesman for the Mexican consulate in El Paso said that the indigenous tradition of the Day of the Dead has been adopted with some cultural variations on the U.S. side of the border, where altars are set up in honor both of loved ones and celebrities. On Day of the Dead, observed November 1 and 2, Mexicans celebrate and honor the lives of the deceased and build altars to receive the souls of their loved ones.
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