Mexico Funding Needs Lower in 2013

Mexico’s gross financing needs of MXP1.28bn ($102bn), which represent 7.7% of GDP, are down from last year’s 8.1% of GDP, according to the finance ministry’s annual borrowing plan. The MXP416m in net indebtedness needs represent 2.5% of GDP, compared to 2012’s 2.7%. Most of the needs will be satisfied in the domestic market. In terms of external financing, ministry officials have indicated a $7bn ceiling for 2013, and will consider sources including dollars, yen and euros. In Mexico, the government plans to add a new 5-year fixed-rate syndicated bond, and will retap its 3, 10, 20 and 30-year Mbono benchmarks. In the UDI-denominated space, it plans to continue reopening the 3, 10 and 30-year Udibonos. The finance ministry projects an increase in net debt to 26.8% of GDP this year, from 26.4% in 2012. Net external debt would fall slightly, to 5.1% of GDP from 5.2% previously. The government’s overall financing costs should stay flat at 1.7% of GDP. The financing plan – the first under the new Pena Nieto administration – is seen as a continuation of the debt polices of the previous years. Barclays, in a report, calls it a “positive development because it provides certainty with respect to debt management under the new administration.”