Mexico City. The weakness of the rule of law in Mexico and the lack of transparency in accounting and legal information of some companies limit access to credit, more than interest rates, which are in restrictive territory, said Juan Pablo Loperena, CEO of Engen Capital, a multiple-purpose financial company (Sofom).
In a mixed-format press conference after his Grito BIVA, for having issued private debt for an amount of 4.5 billion pesos, 2.3 times its objective and with an AAA rating from the main credit risk firms, Loperena said that facilitating access to credit for companies does not necessarily involve the interest rate, since the problem in Mexico is called the rule of law.
“As long as the rule of law and the enforcement of guarantees are easier, then access to credit will be better. Until that is resolved, it will be more difficult to generate the trust that we need as financial intermediaries to provide resources to companies.”
According to the director of the independent financial institution specializing in leasing, corporate credit and other services, the rule of law has even more weight than the high reference interest rates in the country, which, although they began to fall this year, are still in highly restrictive territory.
““If the rule of law and the enforcement of guarantees are easier, then access to credit will be better. Until that is resolved, it will be much harder to generate the trust that we need as intermediaries to be able to deliver resources to companies,” he said.
When asked about the health of SMEs in Mexico after the pandemic, Juan Pablo Loperena said that the problem for many companies is generating the information necessary for potential creditors or financial intermediaries to be able to grant credit, because many times this information is not organized or supported.
“Beyond the impact of the pandemic, the economy has already returned to normal, but there were certainly people who fell by the wayside, and they were victims of not having this accounting, financial and legal structure that affected them in order to be able to seek resources in the market.”
A relief from the depreciation of the TC
On the trading floor of the Institutional Stock Exchange (Biva), the director of Enge Capital said that despite the fact that the Mexican economy is slowing down, for the next 12 months he plans to provide financing to the small and medium-sized business and corporate sector in a range of 10 to 12 billion pesos and close the year with an 18 percent growth.
The relocation of companies, said the executive, has had a certain effect, along with the demand for financing to carry it out, and is one of the reasons that has allowed Engen Capital to grow.
For his part, Gerardo Vargas, finance director of Enge Capital, said that one relief that has occurred was the depreciation of the exchange rate, which has helped his exporting clients a lot.
““They are seeing projects grow (companies) and having a high real rate makes capital more expensive, —due to the interest rate and the exchange rate–,” Vargas briefly commented.
Engen revealed that its financing needs for the remainder of the year are covered, but in 2025 it could seek resources again, although it will evaluate whether to do so through the stock markets or through private schemes.
#Lack #rule #law #limits #credit #Engen #Capital
– 2024-08-22 06:13:54
