Despite the government’s high fiscal deficit that will go from an estimated 5.0 percent in 2024 to 3.9 percent as a percentage of GDP by 2025, Mexican President Claudia Sheinbaum said she is analyzing alternatives to reactivate steel production at the giant steel company Altos Hornos de México (AHMSA), paralyzed since 2023, according to press reports.
“AHMSA has not been forgotten, we are following up and we have to find an alternative so that all workers can recover their jobs,” said President Sheinbaum on Friday on a working tour of the northern city of Frontera, in the Mexican state of Coahuila, reported the local newspaper El Siglo de Torreón.
The town of Frontera is 6.1 miles north of the city of Monclova, home of AHMSA, a steel company paralyzed by iinsolvency and with a capacity of 5.5 million metric tons (mt) per year. The company is judicially declared bankrupt, which will allow th sale of assets free of liabilities.
President Sheinbaum said that the Ministry of Finance (SHCP) and the Ministry of Labor (STPS) are the federal entities that are looking for the alternative.
Because the company is bankrupt, the assets will be auctioned off to the highest bidder. To intervene, the government would have to make an economic position like the interested private investors. This would occur at a time when concerns about the high fiscal deficit and lower GDP growth prospects for 2025 caused Moody’s and HR Ratings to change the outlook for Mexico’s sovereign rating, which could be downgraded.
If Mexico’s sovereign rating is downgraded by HR Ratings, the investment grade would be lost. If Moody’s downgrades, Mexico’s sovereign rating would be one step above the so-called junk or non-investment grade bonds.
If Mexico loses its investment grade, the cost of debt will have to pay a higher interest rate on its debt, which will negatively impct public finances.
Original Article: https://www.steelorbis.com/steel-news/latest-news/mexican-government-looking-for-alternatives-to-reactivate-ahmsa-1368598.htm
