Local currency – Mexico: Closer to home

May 1, 2013

A growing number of Latin American borrowers are looking to Mexico’s debt markets – the most sophisticated in the region – to raise financing

By Mariana Santibáñez

In early March, Chile’s Molymet issued in Mexico’s domestic debt capital market for the sixth time, selling a 10-year, 1 billion peso ($78 million) deal.

The processor of molybdenum and rhenium has become a regular borrower in the Tequila market as it raises cash for its local subsidiary. Issuing there also helps it diversify its investor base in a currency that has a well-developed swap market, Jorge Ramírez, the company’s vice-president of finance, says.

When it debuted in the market in October 2009, Molymet was just the second foreign corporate to do so. Spanish utility Iberdrola was the first, with a 10-year, 1.5 billion peso bond in 2008.

Since then, the market has taken off. Borrowers from Latin America outside Mexico have around $1.8 billion worth of peso debt outstanding, according to Dealogic. The deals are part of a trend among Latin American...

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

Jan Dehn, Ashmore Investment Management