Mexico's largest payroll lender is close to bankruptcy

Mexico’s largest payroll lender is close to bankruptcy

The company has been working with creditors on a restructuring plan that would allow it to continue operating after it failed to pay holders of a Swiss franc bond.

The authorities have said that they do not see a risk of contagion from the Real Credit default to the country’s financial system. However, the bonds of other non-bank lenders, such as equipment leasing firm Unifin, have plunged since Credito Real’s default.

Plans are not final and could change. A representative of Crédito Real declined to comment on the matter.

The company focuses on payroll and small business loans, and has $1.9bn in global notes out of total debt of 53.3bn pesos ($2.72bn). Crédito Real is the second non-banking institution in Mexico, after Unifin.

Credito Real’s notes have been under pressure since April 2021, when the company disclosed revisions to its 2020 release that showed a sharp increase in its non-performing loan portfolio.

The review came shortly after rival Alfa Holding SA revealed a $200m accounting error that sent its bonds plummeting and shook investor confidence in Mexico’s lightly regulated non-bank lending industry.

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