Strongest Quake in Century Hits Mexico, at Least 58 Dead

Updated on
  • Quake struck Pacific coast; damage reports still coming in
  • Peso declines, refinery closed; most companies see no impact

Mexico Hit by Magnitude 8 Quake Near Tres Picos

Mexico was hit by its strongest earthquake in more than a century, killing dozens of people in southern states and shaking buildings in the capital.

The tremor revived memories of a 1985 earthquake in Mexico City that killed thousands, though early indications were that last night’s quake, which struck off the Pacific coast hundreds of miles south of the capital, hasn’t caused fatalities on that scale. With information about the impact on remote rural communities still coming in, the government said at least 58 had died and warned of aftershocks. Concern that the quake could hurt already sluggish growth in Latin America’s second-biggest economy drove the peso lower.

Damage to the municipal palace of Juchitan in Tapachula, Mexico, Sept. 8.

Photographer: Pedro Rasagado/EPA-EFE

The temblor hit offshore near Chiapas state at 11:49 p.m. local time. It had a magnitude of 8.2, according to the U.S. Geological Survey and Mexico’s National Seismological Service, making it larger than the 8.0 quake of 1985.

The biggest death toll so far was in Oaxaca state, where homes collapsed and the nation’s largest refinery was shut down for some time.

While Mexicans in the capital heard sirens and voice alerts a few seconds before the quake struck, residents of Oaxaca City -- like 31-year-old Mayra Vasquez -- received no such warning. The first they knew was when their homes started shaking, and many ran onto the streets.

‘Going to Die’

“It was the most horrible thing I’ve ever lived,” Vasquez said by phone, her voice still quavering some 10 hours later. “We stood outside, my sister and I, watching the buildings sway from side to side. We were waiting for them to just... collapse.” Out on the street, the children were crying; and when the quake stopped, she said, the adults huddled together in prayer, expecting an aftershock. “I really did think that we were all going to die.”

Chiapas Governor Manuel Velasco said hospitals, roads and bridges in the region were damaged and four people had died. President Enrique Pena Nieto said there were two deaths in Tabasco state.

Mexico City’s mayor said the capital seemed to have withstood the quake well. There were fewer cars on the streets during the morning rush-hour than usual, but public transport was functioning normally. Still, schools were shut down for the day as Pena Nieto warned of the risk of aftershocks with a magnitude as large as 7. Several smaller ones have already been reported.

The country’s state oil company Pemex suspended operations at its largest refinery in Salina Cruz, west of Chiapas on the Pacific coast. It said by email that the shutdown is only “temporary” and the facility is in the process of restarting, without providing a timeline. Mexico’s Natural Gas Association said the industry’s infrastructure was fully operational.

Catastrophe Bonds

The peso posted losses of as much as 0.4 percent against the dollar after initial reports of the quake, and it was down 0.2 percent at 12:30 p.m. local time. The benchmark stock index fell 0.4 percent. Early damage assessments have no “significant credit implications” for the country’s regional and local governments, according to Moody’s analyst Matthew Walter. The federal government will finance the majority of rebuilding, he said.

Even as natural disasters roil North America, investors in Mexico seem to be maintaining their composure, said Aldo Miranda, an equity sales trader at CI Casa de Bolsa in Mexico City. Hurricane Katia was poised to hit Mexico tomorrow and Hurricane Irma was set to strike Florida late Saturday after leveling small Caribbean islands this week.

"It seems the damage so far hasn’t been too bad so investors are thinking there’s no need to panic," Miranda said. "It was the most intense quake I ever remember feeling but honestly it seems like the infrastructure in Mexico held up pretty well."

Finance Minister Jose Antonio Meade, who outlined the country’s 2018 budget plans Friday in a previously scheduled announcement, said the government is working to assess the economic damage.

To read about catastrophe bonds

He also said that Mexico is evaluating whether its recently issued catastrophe bond will be activated. The bond, the largest of its kind ever issued by the World Bank Group, protects against losses worth up to $360 million. A Swiss-based fund manager that specializes in such securities, Plenum Investments AG, said it holds 1.15 percent of one tranche and expects the earthquake to wipe out some investors.

To read more about possible market reaction, click here.

The country’s business community was still assessing the damage to Latin America’s second-biggest economy early Friday. Spokespeople for companies including Mexichem, Mexico’s largest petrochemical company, and coke bottler Coca Cola Femsa said their operations haven’t been affected, and AT&T Inc. said its network was working fine. America Movil SAB said most of its network was operating normally except for certain areas in the states of Oaxaca and Chiapas that had had power outages.

Cemex SAB, Femsa SAB and Alfa SAB said they had no reports of affected operations.

Shopping centers in southern Mexico owned by Fibra Uno, the country’s largest real-estate investment trust, suffered minor damage, spokesman Antonio Tejedo said in an emailed response to questions. He said the company doesn’t foresee any impact on operations, or security risk for customers.

‘And Now This’

Mexicans may not get much respite before the next natural disaster strikes. Hurricane Katia is forecast to come ashore in the Gulf of Mexico early Saturday. The country’s National Water Commission said that storms are expected in 13 states this weekend, including Chiapas and Oaxaca.

In Oaxaca, communities had already been hit by heavy flooding earlier this week. Residents were still struggling to repair the damage when the earthquake struck.

“We had just finished cleaning up the water,” Vasquez said. “And now this.”

— With assistance by Michelle Davis, Nacha Cattan, Eric Martin, and Juan Pablo Spinetto

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