The Business Year

Alberto I. Ramos

Chairman, HR Ratings

Alberto S. Jones Tamayo

President & Director General, Moody’s

Rating agencies play a key role, providing both up-to-date information on companies and forward-looking analysis.

What differentiates your company from its competitors?

ALBERTO RAMOS Our competitors used to do analysis based on old information, assuming a company wants to see some financial reassurance of the last five to 10 years. It is much more important to see what will happen in the future. In our reports, we focus on forward-looking analysis and publish the financial statements of entities. Every year, we do a double check of what we were expecting, our best-case scenario, the stress scenario, and reality. The second differentiator is transparency. On our website, all of our ratings are free. This way, investors can go into the detail of the full reports and the process of analysis of each entity. We also made our methodologies fully available to the public.

ALBERTO JONES TAMAYO Our investors differentiate us because of the insight of our analysis, the depth and availability of our analysts to investors, the analysts’ level of expertise, and how frequently we engage with the market to let them know our opinion on everything relevant to what is happening or may happen to a company, industry, bank, country, or sector. In terms of transparency, we have the most diverse set of methodologies for industries and types of financing. We have a huge set for infrastructure and for project finance. Talking about industrials and consumer goods, we have a large array of methodologies with each pinpointing the main drivers of the credit.

What is your view of the current situation with the economy?

AR In my opinion, the US election has not helped the short term with the volatility of the peso, the economy, oil prices, our slow growth, or the increase in the country’s debt. Yet, it is important to let investors know that Mexico is not a country that depends on oil. Oil is important, but our economy is distributed across many different segments and sectors. Our problem is that Mexico still depends on the American market so everything that happens there is important. In 2018, we will have presidential elections. However, in 2017 different prospects from different parties will start appearing. We are going to continue to see volatility but the peso should stabilize very soon, and I do not expect to see the higher volatility we have seen in the past days. We have more stability in our institutions now. Our financial system is well regulated and remains in an excellent position compared to other countries.

AJT International investors have increasingly been investing in Mexican companies or government issuing securities. Despite external shocks, Mexico has a huge population, a relatively high income per capita, and a large and diversified economy, and is a global leader in certain industries. The participation of foreign investors is significant and demonstrates the importance of this country. The investor base of Mexican securities is strong. The currency should also not be a restriction to investing here. Mexican exporters also import and the net is positive for them in terms of how the currency affects them. There is enough financial flexibility for large Mexican companies to switch between financing in one or the other currency relatively quickly. Although interest rates in Mexico began to increase last year and will likely continue to do so, most of the growth and modernization of the industrial platform of this country has been done at interest rates that are much higher yet allowing for a still profitable business.

What are your goals for growth in the medium term?

AR One of our goals is to continue to lead the rating industry in Mexico. We have grown very much in recent years. We have had many challenges, from human resources to operations. That is a part of growing and giving the level of service that we promised from day one. Another challenge is working in the US, which is a completely different and more sophisticated market than Mexico. We are sure we can be competitive there. We do analysis differently from our competitors in the US; hence, the US is our main focus for growth. However, we still want to take good care of Mexican and American companies that want to have insurance in euros. We will also explore opportunities in South and Central America.

AJT Naturally, we hope to continue to be relevant for investors and for issuers of debt regarding the timeliness and accuracy of our ratings. We also want to ensure that our analytical coverage continues to grow to continue to be increasingly important to investors.



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