Why Mexico’s Shadow Banks Are Raising Investor Fears

Spooky things can come out of the shadows, and shadow banks, as non-bank lenders are called, have been a source of unpleasant surprises for markets across the globe over the years. Now shadow banks in Mexico, where they have boomed recently, are giving investors the willies after two of the largest of them announced sharp revisions to their financial statements. Bonds for a range of lenders plummeted on fears of what else might be lurking in the sector -- fears compounded by the deep cuts made to Mexico’s financial regulator last year amid the stresses created by the pandemic.

Companies including Alpha Holding SA, Credito Real SAB de CV, Financiera Independencia SAB de CV, Unifin Financiera SAB de CV, Operadora de Servicios Mega SA and Mexarrend SAPI de CV, saw their bonds fall sharply in April after Alpha and Credito Real revised annual financial statements.