LatAm Weekly – July 15-19

Mexico – Natixis’ Pemex Conference call with Welligence’s Pablo Medina On Wednesday, July 17th, Natixis hosted a conference call with Pablo Medina from Welligence Energy Analytics to discuss Pemex’s business plan [for playback dial 1-(888)-843-7419 in the US, or 1-(630)-652-3042 outside the US, passcode 4885 4530#]. We summarize the main takeaways of the call. Argentina – Inflation continues to slow, boosting Macri June inflation, released July 17th, clocked in at a 2.7% MoM figure marking the third month in a row of monthly disinflation. After peaking at 4.8% MoM in March, inflation has been consistently trending downward. However, annual inflation remains at 55% YoY. Argentina – Moody’s gives a negative outlook Moody’s gave Argentina a negative outlook but affirmed the B2 rating. Quoting directly: “On 12 July, we affirmed Argentina's B2 rating and changed the outlook to negative from stable to reflect 1) increased uncertainty regarding the continued implementation of policies that, by addressing Argentina’s fundamental imbalances, restore reliable access to international capital markets and contain the risk of further damaging currency shocks 2) the rising risk that policy uncertainty itself leads to a material, sustained shift in sentiment that increases financing pressures and erodes buffers.” Moody’s is worried about the lack of economic growth, the increase in the debt to GDP (largely due to ARS depreciation since 76% of the debt is linked to the FX) to 75% of GDP, and the massive increase in the interest bill which rose 127% in the first five-months of 2019. Also, Moody’s is worried about impact of the October elections. In sum, Moody’s is worried about the trajectory of economy, the fiscal accounts and the effects of election related uncertainty.