Mexico can afford to be opportunistic in international debt
markets this year, and hopes to make further inroads into Asia,
public debt chief Gerardo Rodríguez has said.
Mexicos borrowing requirements this year are
relatively low, and are for the most part already met, he told
We have a lot of room for manoeuvre during the rest of
the year, Rodríguez, the nations director of
public credit, said. We are looking to sell between $2
billion and $3 billion, and were not thinking of doing
Rodríguez said Asia is a great market for Mexican
bonds because of the quantity of institutional money that has
been concentrating there. Asias participation is
currently very small, but there are some players, and we think
there is a lot of potential, he said.
Mexico has also been pushing the envelope in its local
currency debt market. In February it issued 25 billion pesos in
10-year local currency debt through a syndication with several
banks, with a yield of 7.66%. It plans to sell a 30-year
inflation-indexed local bond next week through similar
Mexico has been pushing out maturities on its local debt,
making it increasingly popular with foreign investors, but its
system of regular auctions means it takes months of reopening
for a local bond to reach benchmark weight.
It hopes the February bond will unlock the door to new
foreign markets by earning it a place in Citigroups World
Government Bond Index (WGBI) a coup that would make it
accessible to a wider pool of international investors,
especially in Japan.
Rodríguez believes Japanese retail investors are a
great potential market, noting Japan has one of the highest
savings rates in the world and an enormous asset management
Mexico issued a 150 billion yen Samurai bond in December,
using a guarantee from the Japan Bank for International
Cooperation (JBIC), and Rodríguez says it would
definitely consider doing that again.
Mexico may face competition from Brazil. The country has no
outstanding yen debt, but Paulo Fontoura Valle, undersecretary
for public debt at the Brazilian treasury, told Emerging
Markets that he is also considering an eventual strategic
return to the yen market.
Economists raised doom scenarios last year when Mexico,
suffering from declines in oil revenues, stared into a fiscal
abyss. It saved itself by pushing through a last minute tax
In Mexico we took measures on the fiscal side that
lots of other countries are going to have to do now,
Rodríguez said. Thats what investors are
worrying about now. Theyre not worrying about us because
we took action.
Total debt coming due in 2009 was $6.96 billion, at the
height of the crisis. This year only about $2.4 billion comes
due, two thirds of which Mexico already has covered. Borrowing
requirements for 2011 are down to about $1.6 billion.