The Infrastructure and Real Estate Trusts (Fibras) index is close to hitting a new all-time high. In the graph, everything seems to indicate that these firms have left the effects of the pandemic behind, but the reality is different: now they face a loss of attractiveness due to the rise in reference rates by the Bank of Mexico (Banxico). ).
After the scourge of the pandemic in the economy in 2020, Banxico’s monetary policy became expansionary, having as a mechanism the reduction in the reference rate; With this, credits become cheaper, encouraging consumption, investment and the economy in general. This drop also makes capital market instruments, such as Fibras and shares, more attractive, since they give a higher yield than bonds, whose rate moves at the same rate as the reference rate.
But nothing is free. One of the consequences of lowering the rate is higher inflation, which in Mexico was 8.7% in August, the highest since December 2000, according to the Inegi. To contain it, Banxico changed its policy to make it restrictive, which implies a rate hike (which is already at 8.5%, the highest in history) and, since inflation does not give in, they are expected to continue rising to 9.6%. this year, according to the average of the forecasts of the Citibanamex Expectations survey.
“In general terms, when interest rates rise, [the Fibras] may be less attractive for some investors,” says Eduardo López, an analyst at Grupo Financiero Bx+, since instruments with greater security, such as bonds, begin to pay more.
Another of the implications for fibers is related to their results. “Some of the credits or part of the money planned for projects will be more expensive money. Which implies less utility”, explains Mariana Padilla, real estate investor and business developer.
For now, this is contained. The median variable debt of the Fibras is 19%, a level considered healthy, says López. Its debt profile also looks healthy: its median leverage, measured by total debt divided by total assets, is 32.4%, just 10 basis points higher than two years ago (32.3%), according to Bloomberg.
Opportunities
Inflation has led central banks to raise their rates, but this general increase in prices “in general, is good for Fibras, because the income, on which they depend, can be updated with inflation,” says Ramsé Gutierrez, VP and Co-Chief Investment Officer of Franklin Templeton.
Among the 16 Fibras in the market, there are also some that are attractive due to the recovery of the sectors in which they focus. In the commercial, tourism and industrial ones, “which have income in dollars and there is a lot of demand for industrial space, I think that we will continue to see high occupations,” says López. Offices, however, have been impacted by the trend towards hybrid working.
In general, the rise in rates can affect the Fibras in the short term, but in the long term, says Gutiérrez, “it can be a good investment strategy.” Padilla agrees: “As always, the king of real estate investments and will continue to be one of the most resilient assets.”
