In January, Mexico launched yet another of its liability management transactions. It was, predictably, a blowout. This one was designed to create a liquid 30-year benchmark by reopening the existing 2034 bonds, and that’s exactly what it did: there were $1.5 billion of the 2034s outstanding before the exchange, which meant they were liquid; there’s now $3.7 billion outstanding, which means they are very liquid.
But what price liquidity? Mexico bought back its non-benchmark long-dated bonds at the market offer price, and sold back its new benchmark long-dated bonds at the market bid price.
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