Mexico bond opens dollar market amid slow start
Mexico recorded its lowest-ever bond coupon in Thursday’s deal, but other borrowers are yet to be tempted
United Mexican States sold the first Latin American bond of
the year in dollars Thursday, issuing a $4 billion dual-tranche
transaction that it combined with a liability management
The trade follows international bond sales by
Petrobras in European currencies. Yet overall the bond
market has opened this year with more a "whimper" than a
"bang", in the words of one investment banker.
By January 10 last year, five Latin American borrowers had
sold dollar-denominated bonds,
LatinFinance data shows. And while there is optimism
that the market will pick up as the month progresses, only
one other borrower has announced a dollar bond.
Nonetheless, US employment data released Friday were
"friendly" to the bond market, another banker said. The data
showed a weaker job market than had been expected, which
suggests the country’s quantitative easing program
— which has spurred investment flows into emerging
markets — could be scaled back slowly.
Mexico’s sale of a 3.5% $1 billion 2021 and a
5.55% $3 billionn 2045 bonds was heavily subscribed despite
being priced at levels described as fair, but not cheap, by
people following the deal.
Half of the long bond was made up of paper switched from
five of the sovereign’s outstanding bonds. Those
bonds had maturities between 2026 and 2040, and Mexico offered
to swap them into the new instrument at a spread to the
Mexico scaled back the liability management offers,
accepting just $1.5bn, to contain the size of the long bond,
LatinFinance understands. LF
See full coverage of Mexico’s bond sale in
LatinFinance’s Daily Brief