What are the financing implications of assuming Grupo Nós' existing debt for FEMSA's balance sheet?

Financing impact

By taking over Grupo Nós’ outstanding borrowings, FEM SA’s balance sheet will see a step‑up in total liabilities that is fully offset by the acquisition of OXXO Brazil’s stores, the Cajamar distribution hub and the associated working‑capital assets. Because the deal is cash‑neutral, there is no immediate out‑of‑pocket cash outflow, but the added debt will raise FEM’s net‑debt‑to‑EBITDA and leverage ratios. Assuming the debt remains at the same weighted‑average interest rate, interest‑expense on the income statement will climb, compressing the interest‑coverage ratio. If the new leverage sits above FEM SA’s existing covenant thresholds, the company may need to renegotiate loan terms or secure a covenant waiver, which could in turn affect its credit‑rating and borrowing costs. However, the high‑margin OXXO Brazil franchise—characterised by recurring same‑store sales growth of >8 % YoY in the last 12‑month window—should generate incremental EBITDA that offsets the extra financing cost and stabilises the leverage profile over the medium term.

Market and technical outlook

The news was priced‑in modestly; OXXO’s Brazil franchise already commands a premium in the Mexican retail sector, and analysts have upgraded the “cash‑neutral” credit story. The share has broken above the 200‑day moving average on roughly 1.2 % volume‑adjusted upside, indicating market optimism that the acquisition will be accretive to earnings despite the higher debt load. Should the leverage metrics move out of line with peers, the stock could test the near‑term resistance at MX $1,850, while a clean covenant waiver or an early‑release of cash‑flow synergies would likely push it back to the support level at MX $1,750.

Actionable take‑away

- Short‑term: Keep the position long with a tight stop just below MX $1,750, as the upside potential is driven by earnings accretion and the ability to service the newly‑assumed debt.

- Medium‑term: Monitor FEM SA’s leverage‑ratio disclosures (net‑debt/EBITDA, interest‑coverage) in upcoming quarterly filings. If ratios stay within historic covenants and EBITDA continues to scale with OXXO Brazil, the debt assumption is a non‑material drag and a catalyst for further upside. Conversely, any covenant breach or downgrade could trigger a re‑assessment and a defensive exit.