Four Mexican borrowers hurried out
bond deals Wednesday, grabbing an opportunity to raise cash
amid a respite from recent market turmoil which analysts warned
was far from over.
Mexican state owned utility
Comisión Federal de Electricidad (CFE) was forced to
ditch plans to issue long dated debt and opted instead for a
shorter tenor and a floating rate structure. The company
nevertheless managed to get close to the 15 billion
pesos ($1.2 billion) maximum it was authorized to
borrow, selling a 12 billion peso note. It had planned
a dual tranche five-year floating rate tranche and a 10-year
fixed rate one.
Financial and retail firm
Grupo Elektra also opted for floating rate format, raising
a big deal at the wide end of the price range it had announced.
The company printed a 3.5 billion peso bond, which was
around 20% oversubscribed.
Red de Autopistas de Nuevo León jumped into the
market Wednesday with little advanced notice upon seeing
favorable borrowing conditions. The borrower re-opened a 2047
UDI-denominated toll road securitization Wednesday, adding 1.9
billion pesos to the bond.
Scotiabank rounded out the quadruplet of Mexican borrowers
tapping the market Wednesday, making its first foray into a 10
The deals came as markets pulled
back slightly from a vicious downward run. Yields on US
Treasury bonds tightened five basis points Wednesday, closing a
2.55%, having widened 50 basis points from June 5. Similarly,
the Mexican stock exchange closed up 2.38% Wednesday. The
improvements continued Thursday, with the market up a further
1.91% late morning local time and US Treasury yields down to
Nevertheless, calmer markets are
unlikely to be the end of "the great global emerging markets
correction" but may herald a new phase of slower deterioration,
according to Société Générale,.
"Looking at the recent history of
the US Treasury correction, we estimate that a number of EM
rates markets potentially have much more room to sell off. This
also seems to be confirmed by the observation that the outflows
out of EM have been relatively small by historical standards.
In other words, the deflating of the EM bubble remains fairly
gradual," the bank said Thursday in a research note.