Mexico adds euros to century club
Critics carp at cheap pricing; High yield and dollar trades fill pipeline.
By Rob Dwyer
Mexican issuers and euro currency deals continue to dominate Latin America’s international DCM markets and – in the case of the Mexican sovereign’s 100 year trade – dramatically so.
Mexico took advantage of benign market conditions, created by the European Central Bank’s quantitative easing programme, to become the first sovereign to sell a 100-year euro-denominated bond. Bankers now also report an active pipeline of high yield and US dollar-denominated trades waiting to come to market, which will add diversity in the coming months.
Mexico’s €1.5 billion century bond was the sovereign’s third euro-denominated trade this year – following two €1.25 billion deals (one nine year and the other 30 year) printed at the end of February. Taken with $2 billion in dollar bonds it sold in January, the United Mexican States has now completed its 2015 fund-raising needs.
The return to the European markets so soon after its earlier deal was opportunistic and, according to Alejandro Diaz de Leon, Mexico’s head of public credit, “would have been very hard to anticipate that we could push the maturity out to 100 years until just a few weeks before we announced”.
The US high-yield market is on fire, and we think the dollar market is now open for Latin American high yield
Alberto Ardura, Deutsche Bank
However, Diaz de Leon says that the ECB’s monetary stimulus package surprised “on the upside and sent a very clear message about the willingness to extend throughout the yield spectrum and this provided significant compression throughout the term structure that provided a lot of interest and appetite for an ultra-long maturity bond like the one we issued.”