Mexican government-backed agribusiness lender FEFA raised less than expected in a local bond sale this week as financial and political volatility heightens investor caution, a local money manager said.

FEFA raised MXN4.88 billion ($280 million) in a two-part sale in the local market on Tuesday, falling well short of the MXN8.5 billion it initially planned to sell.

A drop of more than 40% in the size of the placement likely means a big investor that initially showed interest in the issuance subsequently pulled out, Amin Vera, head of investments at local family office Invala, told LatinFinance.

Some investors could be becoming more concerned about the implications for FEFA as Mexico edges closer to elections, he said in an interview.

“In the case of Mexico, agribusiness — especially the placements that have to do with the sector — are very sensitive at political times,” Vera said. Invala does not own FEFA bonds, he added.

Investors may also be gauging the impact on FEFA from the country’s rising debt burden and exposure to a slowing US economy amid higher borrowing costs. Mexico’s 2024 national budget is expected to give the country its largest fiscal deficit in decades.


“In an environment in which investors are already more cautious and interest rates are high, if you are also see changes in government are coming and that the deficit is increasing, that scares everyone,” Vera added.

Investors are closely watching the race to succeed President Andrés Manuel López Obrador. Leading contenders ahead of the June vote, are Claudia Sheinbaum, a scientist and environmentalist from the leftist ruling party, and Xóchitl Gálvez, a businesswoman who has called for opening up the energy sector to private investment and promoting renewable energy.

In Tuesday’s bond sale, FEFA, or Fondo Especial para Financiamientos Agropecuarios, priced MXN3.79 billion worth of two-year bonds at the TIIE interbank lending rate plus 0.30%. It also issued MXN1.09 billion in 3.5-year bonds at the TIIE interbank lending rate plus 0.33%, according to a securities filing.

BBVA, Santander and Scotiabank acted as the underwriters.

Mexican telecommunications giant América Móvil is another issuer to have sold less than initially planned in a recent offering. It issued MXN3 billion worth of bonds late last month, 40% below the MXN5 billion target.