In late August and early September 2008, Mexico spent approximately US$1.5 billion on derivative contracts to protect itself from the oil price remaining below US$70 barrel.  The contracts give Mexico the right to sell oil at prices ranging from US$70 to US$100 per barrel, according to a November 10, 2008 Financial Times report. 

Tomas Lajous, a UBS analyst in Mexico City who was quoted in the report said, “The hedge is very good news . . . a presumed cost of some $1.5bn is immaterial relative to risks.”  Mexico relies on oil exports for up to 40 percent of government revenue. 

On Monday, November 10, 2008, ratings agency Fitch cut the outlook on Mexico’s sovereign debt from stable to negative, citing falling oil prices, among other factors.

Southwest Airlines Co. (NYSE: LUV) announced on November 11, 2008 that it intends to enter into a codeshare partnership with Mexican passenger airline Volaris, a brand owned by Mexican group Concesionaria Vuela Compania de Aviacion, S.A. de C.V. based in Toluca, state of Mexico, according to an Austin Business Journal report.

The proposed partnership is subject to regulatory approval by the Mexican and U.S. governments.  If the deal is approved, flight schedules are expected to be announced in 2010.

The Mexican government announced that it will require Mexican companies whose shares are traded on the Mexican stock exchange (bolsa de valores) to adopt International Financial Reporting Standards (IFRS) over the next four years, according to SentidoComun.com report.  Canada, Chile, and Brazil, have also recently announced their intent to adopt IFRS standards for publicly-traded companies in their jurisdictions. 

The governments of France, Spain, and the United Kingdom currently require that publicly-traded companies adopt IFRS.  The U.S. recognizes the validity of IFRS and permits foreign companies that are publicly-traded in the U.S. to use such standards without having to reconcile them with U.S. accounting standards.

The adoption of IFRS in Mexico should provide greater transparency and clarity for foreign and local investors in Mexican publicly-traded companies.  Hopefully it also leads to increased liquidity in the relatively illiquid Mexican securities markets.

JP Morgan Chase has sued iconic Mexican supermarket operator Controladora Comercial Mexicana (CCM) (MXK: COMERCIUBC) in a New York state court alleging breach of its obligation to maintain collateral in its exchange-rate derivative transactions, according to a Sentidocomun.com report, which cited a Bloomberg report.

The lawsuit seeks US$477.5 million from CCM.  CCM said that it had been notified of the lawsuit and that it expected to be the subject of similar actions in the next few days in the wake of its October 9, 2008 petition filed with a Mexico City bankruptcy court seeking creditor protection (concurso mercantil).  The report said that Barclays, Goldman Sachs Group, and Merrill Lynch had filed similar lawsuits against CCM.

As Mexico Law Blog reported on October 27 and 29, 2008, CCM’s October 9, 2008 bankruptcy filing was rejected by the Mexican bankruptcy court for undisclosed reasons; following the rejection, the company announced plans to immediately file a new petition, which it did on October 28 or 29, 2008.  No news has been issued confirming the acceptance or rejection by the Mexican bankruptcy court of the company’s new petition.

In October 2008, CCM’s debt inflated to US$2 billion following huge losses on exchange-rate derivative bets against the dollar, according to a Reuters report.  CCM said in late October that it had obtained loans worth up to MX$3.327 billion to continue paying suppliers.  One of the loans, for up to MX$3 billion, is guaranteed by Mexican development bank Nacional Financiera (NAFIN).

Mexican real estate development company Consorcio Ara, S.A.B. de C.V. (MXK: ARA) has commenced work on a major real estate development project called Citara on land located north of Mexico City in Huehuetoca, state of Mexico, according to a Mexbiznews.com report.  The report said that the project was expected to include 26,000 housing units, 25 schools (kindergarten through secondary school), green spaces, and commercial and industrial facilities.

Consorcio Ara warned on October 22, 2008 that it did not expect revenue growth in in 2008 compared with the previous year because of choppy markets and delay in new residential construction.

Wal-Mart de Mexico, S.A.B. de C.V. (ADR OTC: WMMVY) has frozen prices on more than 500 basic products that are private label Wal-Mart brands, as well as the cost of tortillas (to MX$5.05 pesos per kilogram), in all Wal-Mart Super Centers in Mexico, according to an Excelsior.com report.  The price freeze will remain in effect until December 31, 2008.

Mexican President Felipe Calderon has requested a January 20, 2009 meeting with President-elect Obama to discuss issues including immigration and anti-drug trafficking measures, according to a Reforma.com report (subscription required).

Mexican billionaire Carlos Slim Helu’s real estate holding company, Inmobiliaria Carso, S.A. de C.V., has acquired a 7.64% stake in Edmond, Oklahoma-based Bronco Drilling Company, Inc. (NASDAQ: BRNC), which has a contract to drill three wells for Pemex, according to an October 22, 2008 Schedule 13G SEC filing by Bronco.

All of the outstanding voting shares of Inmobiliaria Carso are controlled by a Mexican trust, the beneficiaries of which are Carlos Slim Helu and family members Carlos Slim Domit, Marco Antonio Slim Domit, Patrick Slim Domit, Maria Soumaya Slim Domit, Vanessa Paola Slim Domit and Johanna Monique Slim Domit. 

Inmobiliaria Carso purchased 2.2 million shares of Bronco on October 15, 2008 for approximately US$15 million, based on the company’s share price at the time of acquisition.

Vitro CEO Federico Sada Gonzalez has resigned effective November 6, 2008, according to a Debtwire.com report, which cited a company statement issued internally and leaked to the press.  In the statement, the report said, Mr. Sada Gonzalez indicated that his reason for resigning was that ”the interests of the company are ahead of my personal interests.”

The Debtwire report quoted undisclosed source who said that Vitro “is much more in play now” than it was last week and that a petition for bankruptcy protection (concurso mercantil) could be an option if the company’s liquidity situation worsens.

The report said that Federico Sada Gonzalez’s older brother, Adrian Sada Gonzalez, who is currently Vitro’s chairman, would likely assume the interim CEO role.

Mexican President Felipe Calderon delivered a speech last night about the tragic death of his 37 year-old Secretary of the Interior following the crash of the government Learjet in which he traveled before landing in Mexico City.  The speech, as translated on the President’s website, is copied below:

Ladies and gentlemen of the media:

Today, on his return from a working trip to the state of San Luis Potosí, Interior Secretariat Juan Camilo Mouriño lost his life. The Secretary of the Interior was accompanied by José Luis Santiago Vasconcelos, Miguel Monterrubio, Arcadio Echeverría, Norma Díaz, Captain Julio César Ramírez Dávalos, co-pilot Álvaro Sánchez and flight attendant Gisel Carrillo, who were also my collaborators.

I would like to express my sincerest condolences to victims’ relatives, and my absolute support during these difficult times, particularly to Mari Gely, María, Iván and Juan Camilo, the Interior Secretary’s wife and children, and all his relatives.

His children should know that their father worked until the very last to leave them a better country and a good name. Mexico has lost patriotic Mexicans who worked in the service of the Mexican state; Mexicans who with their tireless, everyday work were building a better country for everyone.

The Federal Government, in conjunction with the proper authorities, will undertake all the necessary investigations, to determine the causes that led to this tragedy. In the meantime, we will confine ourselves to the information derived from the corresponding investigations. In particular, I will refer to Juan Camilo Mourilo who, as you know, was one of my closest collaborators and one of my dearest friends.

Through his death, Mexico has lost a great Mexican: one who was intelligent, loyal, committed to his ideals and country, honest and hard-working. A man whose talent, tact, strategic skill and capacity for dialogue enabled Mexico to advance in many of the major reforms that are being undertaken in the country and who enabled government to advance towards obtaining its goals regarding Mexicans.

For many years of struggle, I shared with Juan Camilo the ideal of a new country, the ideal of a better, different country, the ideal of a Mexico in which justice, democracy, freedom, security, respect for others and the environment would shine forth. We never hesitated to commit our lives to achieving our dream of enhancing our country. His death is a great blow to me yet at the same time, a powerful reason to fight without cease and now, more than ever, for the ideals we shared.

I have instructed my team to redouble its efforts in its everyday work, to work together without surrendering; to work harder every day to achieve the Mexico in which we believe and in which the Secretary of the Interior and his team believed.

I would ask Mexicans, in addition to their prayers, to remember Juan Camilo as a young, committed man, who was both honest and intelligent and offered Mexico his enormous dedication to transforming our country. I would also ask all Mexicans to allow no event, however difficult, as this one obviously is, to reduce our desire for a better Mexico.

We will be informing you and the entire Nation of the investigations regarding this case and in due course, I will inform Mexicans of government’s corresponding decisions.

Thank you.