Mexican Debt Presents an Opportunity for Sovereign Wealth Funds

The Mexican peso had been bruised since the culmination of Donald Trump’s U.S. presidential victory on worries of trade flow changes and a border tax. The Mexican economy is highly-reliant on the United States for exports with trade renegotiations of North American Free Trade Agreement (NAFTA) being a center issue for the united Mexican states. However, in recent weeks, an intense renegotiation of NAFTA appears to be an unlikely scenario, thus giving the Mexican peso some breathing room. From an institutional investor standpoint, Mexico falls into the emerging market category, ripe with risk and opportunity with linkages to the United States. According to SWFI research, sovereign wealth and pension investor activity in Mexico had steadily increased over the years, but remains mired as currency issues draw major concerns. For some investors, the precipitous fall in Mexican bonds and its currency, has been perceived as too excessive, without properly accounting Mexico’s economic fundamentals.

At the end of 2016, Norway’s Government Pension Fund Global held 54,214 million NOK in Mexican government debt. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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