Mexican Unifin’s debt restructuring is negative for other financial companies, Moody’s says

Mexican Unifin’s debt restructuring is negative for other financial companies, Moody’s says

Mexican leasing firm Unifin’s debt restructuring is credit negative and could reflect tight refinancing conditions for Mexican financial institutions, Moody’s rating agency said on Friday.

“Unifin’s restructuring and cessation of principal and interest payments will negatively affect Mexico’s smaller finance institutions, whose own liquidity profiles and funding sources are strained by heightened global volatility and investors wary of Mexico’s,” non-bank financial institution sector, Moody’s said in its report.

The leasing firm on Monday said it would miss principal and interest payments on its debt because of limited sources of financing.

Since then, the company has faced downgrades on its ratings, as well as strong share movements at Mexico’s stock exchange. Unifin’s shares were down 7.21% in late trading Friday.

To Moody’s, Unifin’s default will not affect the country’s financial stability because the non-bank financial institution sector comprised less than 5% of systemwide loans in June 2022.

Still, the agency pointed out that around 20 banks have been “exposed” to Unifin through “secured and unsecured loan products that amounted to more than $1 billion.”

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