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Currency exposure “comfortable”, says Díaz de León after sterling century

Mar 13, 2014

Mexico is “comfortable” with the currency exposure of its 100-year GBP bond sale, its head of public credit Alejandro Díaz de León tells LatinFinance


Source: Dave McLear

Mexico’s sale of a 100-year bond in sterling complies with the country’s debt diversification strategy, and the currency exposure is not a concern, the country’s head of public credit, Alejandro Díaz de León told LatinFinance after the sale on Wednesday.

"We usually keep the exposure in the currency that we issue. We’re not compelled to swap this in a particular short range of time. We are comfortable with keeping the exposure in its original currency," he said. Barclays and Goldman Sachs priced the £1bn 2114 transaction on Wednesday.

After an absence from the sterling market of nearly 10 years, a return to the currency made sense for diversification purposes, he said.

"It opened back up for us some presence with key, long-term institutional investors in sterling, and we saw that in the book — we saw a very strong and good quality book."

Díaz de León said he was pleased with the pricing of the deal. "We have done two [100-year] issuances in the past in the dollar market. This transaction was more than 60% larger — the other two were each $1bn. And in terms of pricing the 2010 centennial was issued at 6.1% yield. It was retapped in August 2011 at 5.96% yield. And this was done at 5.75%, which comes clearly below the others."

Despite the overwhelming size of the bond sale — the sovereign had increased the deal from a £300m to £500m target on the back of nearly £2.5bn of orders from 150 accounts — the borrower will continue monitoring markets, he said. "We have done a significant part of our external financing for the year, but we still have some room. We’re quite flexible and we can issue a little bit more on the domestic side or the external side," said Díaz de León.

"We will still keep an eye on potential alternatives that we can find attractive in different currencies — in the euro, the yen and the dollar — and we’ll have a close eye on those markets to see if there’s a potential transaction." LF

See also:

Full details on the deal’s execution: Mexico plants DCM flag with ultra-long sterling

Alejandro Díaz de León interview with LatinFinance in Mexico City earlier this month: Mexico looks at euros, yen for bond window — Diaz de Leon

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