For Mexican corporate treasurers it is, one might say, the best of times and the worst of times. Good times because the core businesses of most leading Mexican firms are doing remarkably well. The financial crisis of 1994-95 when the currency fell over 60% and GDP contracted by over 5% is being left behind by most businesses. The economy grew 5.4% in the first half of 1998, and with a few notable exceptions, leading corporates have reported healthy first- and second-quarter results.
Tough times because despite the underlying strength of their companies, financial management is finding it increasingly difficult to fund growth. Like other emerging market firms, Mexican corporates have all but given up on raising funds on international markets as fallout from Asia and east Europe sends bond and commercial paper investors running for cover.
Small loans to safe borrowers
At home, a beleaguered banking system - one of the most notable sectors not to have shaken off its tequila-crisis hangover - is only able to provide limited funding to the lowest-risk clients. Since the Mexican government decided to reprivatize the country's banks in the early 1990s, the banking system has been in an almost constant state of flux.