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Capital Markets

Mexico’s economy comes of age

Despite the broader reassessment of emerging market investment, Mexican debt and equity issuance is sustaining and enhancing its appeal in international markets.

The July follow-on issued by Mexico’s largest domestically owned financial group, Banorte-Ixe, can be viewed as a microcosm of the wider economy. Although almost exclusively a domestic Mexican business, and despite having to announce some short-term negative news, the company attracted international investors around the world. (Banorte’s exposure to the troubled, three-largest Mexican homebuilders was substantial but containable, at about 2.2% of its loan portfolio, and much of that exposure was secured against land values.)

The growth outlook for retail banks in Mexico is probably unmatched anywhere else in the world: credit penetration among the population relative to GDP is lower than in Afghanistan and yet economic fundamentals and the medium-term outlook are much rosier for Mexico than for that war-torn comparator. More than 200 accounts bought Banorte shares: the $2 billion sale was upsized to $2.5

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