Setting the Standard
Jun 1, 2003
Mexico comforts investors by being the first sovereign to put collective action clauses in a global bond. Whether the move will advance debate over sovereign debt restructurings remains to be seen.
This February, Mexico became the first emerging market issuer to sell a new kind of flexible bond that supporters say addresses many of the weaknesses of old-fashioned bonds. It also helped head off attempts by the International Monetary Fund to impose a formal, US-style bankruptcy code for overextended sovereigns. Judging by its performance, investors appear comfortable with the new bond, even though it weakens their rights as creditors.Mexico issued the $1 billion, 12-year global bond on February 26 and the spread had tightened by 61.5 basis points two months later. On April 21, the bond traded at a bid price of 100.8 and yielded 6.49%.Goldman Sachs and JP Morgan, joint book runners, launched the bond at a spread of 312.5 basis points with a 6.918% yield to maturity.
The bond comes equipped with socalled collective...
Already have an account?
Subscribe
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Subscribe
Free trial
Take a free two-week trial now for the latest news, data and market analysis.
Free Trial