Mexico Prices Exchange Warrants

Mexico has sold $2.66 billion of exchange warrants – with the dollar bonds coming at $61 per unit to exchange each $1,000 face value of bonds and the euro-denominated paper at €20. Demand totaled $3.54 billion for the $2 billion dollar warrants and €530 million for the €500 million European currency warrants. Last week the sovereign launched an offer to buy back the external debt as part of its long-term plan to replace more foreign currency debt with local currency issuance. For $2 billion in dollar debt, of which there are 12 different eligible outstanding tranches with maturities ranging from 2009 to 2028, the sovereign will issue 1 million units. They are composed of two kinds of warrants exchangeable for 9.5% 2014 and 10% 2024 MBonos later this year. For €500 million in euro, Deutsche mark and Lira-denominated bonds, Mexico will issue 500,000 warrants that will also be exchangeable for 2014s and 2024s in September. The warrants are rated BBB/Baa1/BBB. At the end of 2006, Mexico’s foreign currency debt totaled $39.8 billion, of which $36.2 billion was market debt, according to the Mexican finance ministry. Last year, Mexico paid down $9 billion in non-market debt. Credit Suisse and Goldman Sachs are leading the offer.