Mexico Bags 32% of 2009 Needs

Mexico bagged 32% of next year’s debt service (capital plus interest) with last week’s blowout $2bn 10-year bond sale, according to the finance ministry. “Despite elevated international markets volatility, the government managed to place this benchmark bond at a cost close to the lowest achieved in the past for the same tenor,” says Hacienda. The Global 5.950% of 2019 priced at 99.784 to yield 5.980%, or 390bp over UST. Ministry data shows a UMS 10-year yielding 5.69% in September 2007, 5.74% in March 2006 and 8.66% in January 2001. According to the government, demand was $4bn and the deal was placed with 150 institutional investors, mainly in North America, Europe and Mexico. “This placement allowed the government to increase and diversify its investor base,” says Hacienda. The transaction was executed at just 40bp above the 2017 – according to the leads – versus expectations of at least a 50bp concession taking into account recent US high grade pricing. Bankers hope it paves the way to an active January for bond issuance.