On his recent state visit to the US, Mexican president Vicente Fox bathed in the warm glow of Mexico's new friendship with its northern neighbour. George W Bush tried out his Spanish and everyone else agreed that ever-closer economic ties between the two nations were the new future for Mexican economic growth.
But following the September 11 terrorist attacks on New York and Washington, Mexico is being hit hard by the US slump and Mexican companies are beginning to wonder if such a friendship with the US is worth having. The large industrial sector exports nearly 90% of its products to the US and slowing sales north of the border have been aggravated by a strong Mexican peso.
The Latin American corporate bonds market is not making life any easier. Markets were sent reeling in the immediate aftermath of the attacks, as much of the investor optimism that had been propping up the US economy was erased.
Corporate spreads on the JPMorgan Latin Eurobond Index (LEI) widened 190 basis points to 906bp over US treasuries from September 10 to September 28. More dramatically, Mexico's close links with the US meant the Mexican corporate sub-index on the LEI widened 207bp to 868bp over treasuries in the same period.