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Sovereign Report

Oct 1, 2002

Mexico Sells $1.75 Billion Global Issue

Mexico issued a $1.75 billion, 20-year bond in September that sold like hot cakes even as Brazil edged closer to default. The bond was priced to yield 8.28% at 353 basis points over US Treasurys and has an 8% interest rate. Proceeds from the bonds, which were sold in a day, will be used to buy back $1.3 billion-worth of Brady bonds, issued as part of Mexico's 1990 debt restructuring process. The Brady bonds represent 25% of Mexico's outstanding US dollar par Brady bonds. The bond was originally sized at $1.5 billion, but strong investor demand allowed bookrunners Credit Suisse First Boston   and JP Morgan Chase to increase the offering to $1.75 billion. The government will use the $450 million balance to repay debt maturing in 2003. Because the government opted to use the proceeds for...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management