LatinFinance - January/February 2018 - 29

tions to guard against currency volatility,
Nicolau says. "You're seeing some companies shifting their financing alternatives to
a more domestic view. Broadly speaking,
companies are not only looking at the domestic market from a financial perspective
but also from a consumer perspective."
Mexico's pension funds, known as afores,
could provide an important source of
domestic financing, Nicolau says.
The government, meanwhile, will get a
chance to test investor appetite in Mexico's
oil industry in January when it holds another round of deepwater auctions, its latest
step to open up the country's energy sector. The tender of 29 blocks holds some 4.2
billion barrels of prospective reserves and
marks the latest auction as Mexico moves
to increase private investment in the oil and
gas industry.
Some international oil companies have
voiced concerns how investor protections
enshrined in NAFTA might be affected if the
talks over the future of the trade accord end
without an agreement and whether it could
dampen potential investment in the sector.
Mexico's chief NAFTA negotiator, Kenneth
Smith, has said the country is looking to
incorporate Peña Nieto's energy reforms
into any revamped NAFTA agreement.
Víctor Luque, managing director for
state-owned enterprises at Mexico's energy
ministry, says participation by major oil
companies in Mexico's first deepwater
auction in December 2016 - a month after
Trump's victory - reflected strong international investor interest. Among the companies that won rights to explore for crude in
the Gulf of Mexico were Exxon Mobil and
Chevron.
"We have had a lot of US-based and Canada-based companies participating," he says.
"Some of the companies are also taking part
in our power auctions. These investments
are not based on the short term."
Igor Marzo, CFO of Altán Redes, the project sponsor of the Red Compartida wireless
telecommunications public-private partnership, says the developer, with US, Canadian
and Spanish investors among its shareholders, is taking a long view on Mexico.
"We believe overall Mexico has very
solid economic fundamentals, despite what
happens in the short term," he says. "We're
really focused on a long-term plan of investment."
José María Zertuche, chief investment
officer at BlackRock's Mexico infrastructure
investment group, takes a similar view.
"While we recognize there's noise around

EDGAR OLVERA JIMÉNEZ, SCT

"WHENEVER
GOVERNMENT CYCLES
COME TO AN END,
THERE IS ALWAYS
UNCERTAINTY"
NAFTA and politics," he says, "we obviously need to understand and follow all the
dynamics of what's going. But we believe in
investing through the cycle."

Congress in addition to approval from more
than one-half of state legislatures. "It's obviously premature right now but it seems a bit
complicated" for that to happen, he says.
López Obrador has vowed to increase
infrastructure spending if elected but he has
criticized one of Peña Nieto's key infrastructure projects - a new $13 billion airport in
Mexico City.
In an economic manifesto released in
November, López Obrador raised questions
about the airport, which is currently under
construction.
Ricardo Dueñas, CFO of Grupo Aeroportuario de la Ciudad de México (GACM),
the government entity in charge of the new
airport, says it continues to move forward

Ricardo Dueñas, GACM (left), Jorge del Castillo, MUFG México, and John Koike, MUFG

Months ahead
The coming months pose a challenge for
Mexico as the presidential campaign heats
up. In addition to López Obrador, other
presidential candidates include Peña Nieto's former finance minister, José Antonio
Meade, from the ruling Institutional Revolutionary Party (PRI) and Ricardo Anaya, the
head of the right-leaning National Action
Party (PAN).
López Obrador's lead in the polls has
caused concern among some investors
because of his harsh criticism of reforms
that opened Mexico's petroleum and electricity industries to private competition.
Some Mexican business leaders worry he
could push to slow or roll back the reforms,
but López Obrador has recently seemed to
tone down some of his hardline positions
on energy reform.
Jiménez points out that rolling back any
of the reforms would require votes from a
three-fourths majority in both houses of

as planned.
"By the end of 2018, we're looking to have
at least 80% to 85% of the contracts signed,"
he says. "We think that the project is needed
and already far along. We knew when we
started it would be a project that overlapped
presidencies."
Jiménez lists the new airport as one of
several infrastructure priorities the Peña
Nieto administration plans to push in its
waning days. Others include the expansion
of the Veracruz port.
"Our plan is to keep pushing these projects up until the very last day," he says. "We
believe these projects are of tremendous
significance and have been well-received, so
our mission is to strengthen them." LF
LatinFinance Roundtables are underwritten by sponsors. The editors retain
control over the magazine articles to
ensure objectivity and independence.

January/February 2018 - L ATINFINA NCE.COM 29

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