Mexico will sell more than $1 billion in inflation-indexed
local bonds today, Gerardo Rodríguez, director of public
credit, has told Emerging Markets.
The deal is the second leg of a novel syndication plan aimed at
better positioning its local debt on the world stage.
This morning we are announcing a transaction for just
over 15 billion pesos, Rodríguez told Emerging
Markets on Monday. Its going to happen
tomorrow. We are starting the whole book building operation and
hope to be able to complete the transaction tomorrow around
Mexico has been pushing the envelope in its local currency debt
market, pushing out maturities to as long as 30 years, and
making it increasingly popular with foreign investors. But its
system of regular auctions means it takes months of re-opening
for a local bond to reach benchmark weight.
In February it issued 25 billion pesos in 10-year local
currency debt through a syndication with several banks, getting
a yield of 7.66 %.
International investors only make up about 5% of the buyers of
inflation-adjusted bonds, known in Mexico as udibonos after the
udi, the inflation-adjusted financial currency unit developed
in the wake of Mexicos 1995 peso crisis.
But Rodríguez hopes Tuesdays auction will entice
more global players. This is a bit more of a local affair
[...] but this is a chance to boost that, he said.
There is some interest. Some people have been asking us
about it, he said. We dont know what the
foreign participation ratio will be but we hope it will be
higher than the current levels.
Mexico hopes the February bond, the first tranche in its debt
syndication programme, will open the door to new foreign
markets, by earning it a place in Citigroups World
Government Bond Index (WGBI) which would make it
accessible to a wider pool of international investors,
especially in Japan.
With no word yet on inclusion, Rodríguez said Mexico was
eagerly waiting a decision, but not overly concerned.
Theres still no news, he said. They
told us last time we spoke that it would be in the first
quarter, but the first quarter is nearly finished.
Inclusion in the index is not essential, but it would be
very positive to help make our local bond market more