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LOCAL CURRENCY DEBT: After the storm

Nov 1, 2013

In the wake of a brutal sell-off, investors are rushing back to local currency emerging market debt. But this time, the bet is no longer one way

By Katie Llanos-Small and Taimur Ahmad

Mexico's state-owned oil company Pemex marked a turning point for Latin borrowers in September when it succeeded in selling a peso-denominated global depository note.

It was the first such local currency instrument sold since the bond market re-priced spectacularly in May and June, on expectations of tighter global liquidity.

"We were able to issue this local bond, even though the market was in a very complicated situation," says Rodolfo Campos, Pemex's treasurer.

The oil giant raised 10.4 billion Mexican pesos ($818 million) by selling the GDN. Investors bought the bonds, but it was tougher than the banks running the deal had expected. The bond was priced to yield 7.19%, as much as 40 basis points cheaper than early indications.

Yet the deal represented the first sign of life in the global-local...

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