May 13, 2019

A Perfect Storm

As evidenced by the two charts below, Pemex/Mexico is facing a perfect storm that could result in a massive unwind of both foreign investment in Mexican local currency debt, and foreign holdings of USD$ denominated Pemex debt. AMLO seems to have the backing of the general population, but has lost most support from the Mexican business community, so internal financial allies are few and far between. A decline in exports to China as a result of the current US/China trade war will only add fuel to the fire, and exacerbate an already imbalanced structural situation.