Mexico Tips Bond Balance Toward Price

Mexico scored among its lowest-ever 10-year yields in a $1bn 2020 bond sold Monday, its public credit director says. The sovereign, helped by lower financing needs, is focusing on price rather than size. “We were keen on having something priced tightly, taking advantage of the very strong beginning of the year that the new issue market has had, and strike a good balance with investors,” Gerardo Rodriguez, Mexico’s deputy undersecretary for public credit, tells LatinFinance. “Having a relatively low external financing requirement, in our case, we could tilt the balance more in favor of price rather than size,” he adds. The deal priced to yield 5.25%. Mexico plans to borrow $2.bn-$3.0bn in 2010. It faces $2.4bn in maturities following debt sales of more than $3bn in 2009. “Market consensus is pointing to higher yields for the next few months and in the second half of the year – but people have been saying that for some time and it hasn’t happened yet,” says Rodriguez. “We try not to take a strong view on the direction of markets, but rather take advantage of opportunities,” he adds. The new 2020 was heard trading between reoffer and down 0.25 points at the close Wednesday, according to traders. Rodriguez notes that Mexico will continue to seek diversification this year, including considering a non-guaranteed Samurai bond – if conditions permit, to follow a December issue guaranteed by JBIC – as well as a EUR-denominated issue. On the domestic front, he says February should see Mexico’s first ever sale of local debt through a 1-day syndication format, rather than via auctions, with the aim of establishing new benchmarks instantly. A 10-year MXP bond and 30-year Udibono should be the first to test the format, with specific details due in coming weeks.