Mexico’s finance minister Luis Videgaray has
hailed the country’s first successful
euro-denominated bond sale since 2010 as further evidence of
the economy’s growing vigor, as lawmakers weigh up
the most ambitious reform agenda in a generation.
Addressing the LatinFinance Cumbre Financiera Mexicana
on Tuesday in Mexico City, Videgaray said that the EUR1.6
billion ($2.01 billion) deal "confirms that there exists in the
international financial market a clear appetite for Mexican
assets, and overall risk in the Mexican economy."
He added: "It is the combination of two factors. First, that
Mexico now has a stable economy with strong fundamentals in
economic policy and, second, because we have an encouraging
perspective of the changes that may occur and may accelerate
the growth outlook in Mexico."
The sovereign on Tuesday drew more than EUR4.5 billion in
orders and priced through its EUR curve, having timed the trade
for cost effectiveness. Proceeds are intended for buying back
four series of illiquid euro debt.
The new benchmark priced at 99.492 with a 2.750% coupon to
yield 2.809%, or MS+120bp, at the tight end of 125bp-area
guidance that followed earlier 135bp-area talk. Mexico's 2020
EUR-denominated bonds were seen trading at MS+120bp prior to
the sale, suggesting a pricing inside of the curve when
considering the 3-year extension.
BNP Paribas, Deutsche Bank, and HSBC managed the new sale
and the tender, which followed a European roadshow late last
month. Mexico is rated BBB/BBB/Baa1.
Tuesday’s sale is the largest LatAm
Euro-denominated bond sale since Petrobras raised EUR2 billion
in September 2012, according to Dealogic data, and is the
region's largest ever EUR sale done in a single tranche. It was
also Mexico's lowest-ever yield in euros.
Mexico’s previous euro deal raised EUR850
million at a seven year maturity. A Japanese issuance could be
up next, Díaz de León said.
Speaking at the LatinFinance event, Videgaray said
the administration of President Enrique Peña Nieto was
poised to announce a banking reform that would help extend
credit to small and medium sized enterprises.
The minister highlighted the government’s
ambitious reform agenda, which has already seen the successful
passage of education and labor reforms, with telecoms reform
now set to be debated by lawmakers. He said these reforms
– including an overhaul of the tax system and energy
sectors – were vital to enhancing the
Tax reform is vital for strengthening the
country’s financial capacity so that obligations
can be met on infrastructure, public health, education and
combating informality, which represents more than half of the
country’s workforce, Videgaray said.
"The most important statistic in Mexico in the last decades
which has not been addressed is Mexico’s
productivity which has stalled," Videgaray said.
Mexico’s productivity has lagged its peers
– including Chile, Ireland and Korea – for
the past 30 years, he said.
"If something has damaged productivity in the Mexican
economy it is the fact that, according to the latest
statistics, more than half of the workforce is in the informal
sector," he said.
The tax reform will be addressed in the second half of the
See El Economista's coverage of
LatinFinance's Cumbre Financiera Mexicana