Mummies, Swaps and Mortgages

Mar 1, 2003

Mexico's capital markets are flourishing in a low interest rate environment and enlightened regulation as reforms in the 1990s start paying off. There is room for nearly everybody in the market.

It seems almost anything is possible in Mexico's booming capital markets these days. The mummy museum in the central city of Guanajuato has asked bankers to explore the possibility of securitizing its income stream from ticket sales. Capital markets activity in Mexico is exploding as yields on government bonds plummet and investors hunt out richer pickings in corporate debt, making room even for bizarre potential issuers such as Guanajuato's popular tourist attraction.

Last year, peso-denominated corporate debt issuance grew to $4.04 billion, up from $593 million in 1999. Volumes on MexDer, the Mexican derivatives market established in 1998, grew 360% last year alone, and now more than 10 million contracts change hands on the market each month. It was only a few years ago, as Mexico struggled to recover from the 1995 peso crisis, that a "long-term" investment meant a 28-day deal. Government paper with maturities beyond one year was...

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