Category Archives: Latin America

Only (Limited) Upside for Private Sector Oil Operators in Mexico

Over the medium-term there are likely to be improved opportunities for private sector firms to participate in incentivized service contracts for oil exploration and extraction in Mexico, albeit with asymmetrical contractual obligations, legal & political risks. Opportunities for more far-reaching entry into the Mexican oil sector, including asset acquisition, are viewed as less likely over the same time horizon. Continue reading

Narco-security in Mexico – Fat Tail Downside Risk to Financial Markets

Potential changes in Mexico’s internal security situation pose both upside and downside risks to corporates, each with relatively equal, medium likelihood and medium-to-high impact. With relatively lower probability, an extreme deterioration poses substantial broad-based downside risks for currency, credit and equity markets. Continue reading

My Take on Mexican Politics

Formally, Mexico is structured as a federal constitutional republic, consisting of 31 States plus a Federal District, not dissimilar from the US. It has several distinguishing characteristics, however: 1) it combines constitutional separation of powers with a civil law system, 2) consecutive re-election for the same public office is prohibited (although running for an alternative office is both permitted and common), 3) having been dominated by a single-party, PRI (Institutional Revolutionary Party) for 71 years until Vincente Fox of PAN (National Action Party) won the Presidency in 2000, transition to genuine democracy is still incipient. Continue reading