Infrastructure Financing Opportunities Remain: HR Ratings

The credit rating agency HR Ratings said that despite what seems to be an unfavorable investment environment, Mexico still has much to offer in terms of financing for the infrastructure sector since it could benefit from the opportunities that nearshoring offers.

According to HR Ratings, 2023 will bring good news to the sector as the COVID-19 pandemic will be even further under control and companies will be attracted by the nearshoring opportunities the country offers, a major trigger for financing in the infrastructure sector. “We still see an appetite for financing in the market. It could be explained by, of course, our crescent interest rate, but also because of our stable exchange rate. That, in a certain way, ensures [Mexico] still sees demand for financing,” said Roberto Ballinez, Senior Chief Executive for Public Finances and Infrastructure, HR Ratings. 

Ballinez highlighted that the current administration focuses on its key infrastructure projects, like the Felipe Ángeles International Airport (AIFA), the Mayan Train, The Dos Bocas Refinery and the construction of rural pathways. Nonetheless, he said that the government cannot develop all the infrastructure Mexico needs as it does not invest the required minimum of 25 percent of the GDP. “The federal government has not diversified its investments, according to Ballinez: there is a lack of investment in renewable energy, gas pipelines and hydrocarbon storage projects, among others. “The private sector has not stopped investing. A contraction has occurred, but there are cases where the private sector is participating and investing resources,” Ballinez added. 

Ballinez urged the government to give companies legal certainty, a fundamental factor for boosting long-term investment projects. He said that even though the government announced two infrastructure packages, which was good news for the sector, it still owes the public the third package. Ballinez added that companies are looking to increase their market value that contracted during the COVID-19 pandemic, as well as finance temporarily shelved projects. 

Furthermore, Ballinez stated that companies are looking to move their operations to Mexico owing to its proximity to the US. “Mexico has an advantageous geographical position, and the availability of qualified labor could be a fundamental factor to attract national and foreign private investment,” said Ballinez. 

According to Ballinez, it is not enough to create a favorable business environment or macroeconomic indicators; the government must provide an affordable and reliable energy supply, too.