DF Preps Bond Retap

Mexico City’s government is preparing to reopen a domestic bond sold in June and backed by tax revenues from the federal government. DF plans to sell up to MXP2bn, according to a note from Scotia Capital, divided between 2015 bonds paying TIIE plus 14bp, and 2020 bonds paying a fixed 7.9%. The government indicates an October 6 target, according to regulatory filings. The bonds are sold though a special trust using a structure in which the federal government is technically the issuer, since DF government is not permitted to sell bonds on its own. Proceeds are passed to DF in return for it pledging future proceeds from federal tax disbursements marked for the capital. Proceeds will help fund public works. Deutsche Bank is managing the sale, rated AAA on a national scale. DF raised MXP2bn in the June sale, after receiving MXP8.7bn in orders.