Widening spreads in Mexican government bonds and volatility in Mexico’s peso currency have halted any immediate bond plans for Bancomext, the export credit agency’s CFO said.
Bancomext, however, has not ruled out plans for a benchmark-sized bond sale in the second half of the year that could swell to as much as $1bn, Miguel Siliceo told LatinFinance at this year’s Cumbre Financiera Mexicana in Mexico City.
“We want to reposition the bank in the international markets,” he said. “The idea is to sell a higher benchmark-sized bond, but if markets are too volatile, then we will look at alternatives.”
Alternatives include private placements in the Chinese Formosa bond market or potential transactions in Norwegian kroners and Chinese Panda bonds, Siliceo said.
Bancomext is also working to establish a medium-term note (MTN) program, which would aid its approach to the local investor base and deepen its activity in Mexico’s capital markets.
Proceeds from various bond sales, along with Bancomext’s foreign credit lines, will go towards energy efficiency projects, direct lending to small and medium-sized exporters and sectors such as tourism and the auto part sector.
Approximately 70% of Bancomext’s balance sheet is foreign currency-denominated, while its capital base remains in pesos, posing a challenge in maintaining its capital ratio levels, particularly if FX volatility intensifies.
But last year’s Tier Two Basel III compliant bond helped Bancomext increase its capital ratio from 12% to 19%. The A3/A/BBB+ rated export credit agency priced a $700m Basel III bond last August.
The bank returned to the international bond market in October 2015 after a 10-year absence in the cross-border space.
Siliceo says this year will offer an opportunity to reintroduce Bancomext to the international investor community.
.