Mexico: fears over cliffhanger

Lopez Obrador lead in doubt; Candidates outline policy goals

  • By Lucy Conger
  • 04 Apr 2006
Email a colleague
Request a PDF

Markets are gearing up for the possibility of a cliffhanger in Mexico’s presidential race following a recent poll which shows Felipe Calderon for the first time overtaking long-time front-runner Andres Manuel Lopez Obrador.

Uncertainty is mounting in a race which, until now, had caused barely a stir among investors, despite Lopez Obrador’s populist credentials. “The polls show that we don’t have a good sense of who the victor is going to be,” said Christian Stracke, emerging markets research director for CreditSights, an independent research group. “Maybe things are not quite as certain as they appeared.”

A close outcome – especially one in which Lopez Obrador trails by a fraction – is considered a worst case scenario for the July 2 vote since it could result in prolonged and potentially debilitating protests, especially if vote tampering is suspected, observers say.

“We are closing the gap, we are going to win,” conservative candidate Felipe Calderon told Emerging Markets in a telephone interview the day after the poll was released. In the past month, Calderon revamped his campaign after polls showed support for him stagnating, and called for more solid backing from his PAN party.

Last week’s GEA-ISA poll suggests Calderon, the ruling National Action Party (PAN), rose to 36% against 34% points for Lopez Obrador of the left-wing Democratic Revolution Party (PRD). The poll indicates that Lopez Obrador lost 7% and Calderon gained 4% from February to March. Roberto Madrazo, candidate of the Institutional Revolutionary Party which governed Mexico for 71 years until its defeat in 2000, continues to trail in third place with 28 percent.

The GEA-ISA poll, however, is inconsistent with the trend in other serious polls during the past four months that have shown Lopez Obrador consistently in the lead, with a generous margin of between 7% and 10%.

Nevertheless, the recent uncertainty is raising fresh concerns among analysts. “AMLO doesn’t seem to me like the kind of guy who, if he loses by two percent, will rush to the streets. But if he loses by half a percent and there are widespread allegations of impropriety, you can expect something like that and he’d be within his rights to make a big stink,” Christian Stracke, emerging markets research director for Credit Sights, an independent research group, told Emerging Markets.

The PRD candidate has promised that he will accept whatever outcome results from the race, the first presidential contest in Mexico in which a left-wing leader has a real chance of winning. But he is also known for his ability to mobilize snap street rallies.

Calderon’s programme promises a market-friendly package of policy measures that aim to promote competitiveness and employment and create a favorable environment for investment, he told Emerging Markets. “We want to be a government that re-establishes public security, fulfills contracts, respects [the division of] power and promotes judicial [processes],” he said.

In contrast, Lopez Obrador promises a programme that departs radically from the policies of the past four Mexican administrations. A Lopez Obrador trademark is his concern for the poor. “It is not possible to govern effectively with huge sectors of the population suffering extreme poverty, unemployment and no hope of change,” he told Emerging Markets.

Lopez Obrador would stimulate the domestic market by expanding income support programs, stimulating construction of housing and infrastructure with public-private investment schemes, reducing government, simplifying the tax system to increase tax collection and restructure the energy sector. “We want public investment to become an instrument of public policy, and we want to use it to mobilize and encourage private investment,” he told Emerging Markets.

“Markets have felt not overly concerned about [Mexican] elections because policy continuity is guaranteed by Nafta,” Peter West, senior economist of Paolim Asset Management in London, told Emerging Markets.

  • By Lucy Conger
  • 04 Apr 2006

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 313,852.39 1175 8.95%
2 JPMorgan 286,674.13 1305 8.17%
3 Bank of America Merrill Lynch 281,869.72 974 8.04%
4 Goldman Sachs 214,547.99 704 6.12%
5 Barclays 205,147.76 790 5.85%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Deutsche Bank 31,971.88 102 6.87%
2 HSBC 31,940.18 140 6.87%
3 Bank of America Merrill Lynch 29,065.55 82 6.25%
4 BNP Paribas 24,679.63 135 5.30%
5 SG Corporate & Investment Banking 22,195.55 122 4.77%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 14,960.44 66 7.87%
2 Morgan Stanley 13,992.90 72 7.37%
3 Citi 13,566.56 83 7.14%
4 UBS 13,028.25 52 6.86%
5 Goldman Sachs 11,994.74 65 6.31%