PARALLEL BANKING BEATS BARTER
When money runs out in Mexico, there's barter. A tyre company paid its insurance premium in tyres. Advertising time on TV can be paid for in the goods advertised. A company which had been paid in bicycles gave them to its employees as a Christmas bonus. "We are going back to primitive transactions," said Jonathan Davis, director of the brokerage firm Inversora Bursatil.
Most companies would rather have money, even if they have to pay 130% for it. This is why the informal commercial paper market has grown by leaps and bounds since last summer.
There are two kinds of Mexican commercial paper, bursatil and extra bursatil, or stock exchange and outside the stock exchange.
The bursatil kind was created six years ago. Only triple-A paper qualifies. It has to be underwritten and traded on the stock exchange, with conditions so complicated that the instrument has never been popular. Outstanding at the end of last February were only 24 billion pesos ($48 million).
But the extra bursatil paper has grown to a volume now estimated at 600 billion pesos ($1.2 billion).
The market took off after a government decision which dismayed even the punch-drunk corporate finance men of Mexico.