Mexico's housing loan providers engage in an interest rate battle; Brazilian companies consider public equity markets amid a rising scrutiny on M&A activities; and the political comeback of Argentina's former president is a bane for Macri's economic plans.
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Mexican lenders are starting a new interest rate war in a bid to court the mortgage market, Edgar Juárez reports for El Economista. Strong competition among banks providing housing loans occurred during 2014 and 2015, resulting in significant declines in the interest rates. However, this stalled when the central bank started implementing a series of interest rate hikes, pushing up the rate of financing for housing acquisition by 100 basis points during this period. Now that the central bank has indicated a pause in its rate increase, commercial banks no longer see the cost of mortgages rising and have more room to adjust the interest rates down. In addition, "high competition has resulted in more and more people switching their mortgage to another bank that offers them better credit conditions," Juárez notes.
A tougher stance by Brazil's antitrust regulator on mergers and takeovers is prompting companies to consider alternatives such as public stock offerings, Reuters reports. Cade recently turned down two high-profiled takeover plans, a move seen by the dealmakers as "a more aggressive approach to antitrust-sensitive takeovers in a way we never expected." With a rising scrutiny on M&A activity, firms that were hurt by Brazil's recession are now looking to go to public equity markets for their cash needs. "With Cade taking a tougher stance, executives and advisors must better gauge what core assets they want from an acquisition and which could be easily sold," a lawyer notes.
The possibility of a political comeback by former Argentine President Cristina Fernández de Kirchner is threatening current leader Mauricio Macri's economic agenda, Lucia He writes for Americas Quarterly. Election polls are suggesting Fernández is a frontrunner for a senate seat in the upcoming midterm elections. The strong support to the socialist leader is partly driven by voters disenchanted by Macri's austerity program, which is taking a toll on subsidies commonly received by Argentines during Fernández's reign. A likely Fernández win is a worry for investors, who are latching on to Macri's promises to implement structural economic reforms. A political scientist also notes that "Argentina lacks credibility from foreign investors because it has alternated abruptly between neoliberal and populist policies."
Large renewable energy projects in Mexico, buoyed by support from local development banks, are bringing new players to the country's budding energy sector, Anthony Harrup pens for The Wall Street Journal. Zuma Energía and Cubico Sustainable Investments had won contracts to sell power to the state's energy company in a series of electricity auctions by the government, with the companies' investments for several wind farms and solar energy plants receiving backing from various development banks. Mexico's investment in renewable energy projects is part of the planned sourcing of 35% of its electricity from clean energy by 2024. With development banks on board in the clean energy drive, the country's energy minister is now urging commercial banks to take on a larger role in financing the fledgling electricity market. "Renewable energy isn't just attractive from an environmental standpoint, but also from a standpoint of low costs," Zuma Energía's CEO comments.