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
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 country's productivity.
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