For a country with a very small net borrowing requirement, Mexico has been a huge - and hugely important - issuer of global bonds. In the past year alone it has issued some $8 billion of bonds, making it easily the largest emerging-market issuer. Since it didn't need most of the cash, it generally put it to use in liability management exercises; in doing so, Mexico has become the first country to all but eradicate its Brady bonds. Mexico also got its third investment-grade credit rating in September. But the biggest achievement came at the end of February, when the sovereign stunned the market with a 12-year bond with collective action clauses (CACs). The lead managers were JPMorgan and Goldman Sachs.
The bond was a true watershed moment in emerging-market debt. Until that day, the G7 and the US Treasury had been agitating for years for a country - any country - to bite the bullet and insert CACs in its bonds. No-one would do it: because the purpose of CACs is to make debt easier to restructure in a crisis situation, both bankers and issuers were convinced that being the first country to use them would signal an increased willingness to default, and would cost the issuer a lot of money.