Bond Market Reaches Decade High in 2023

The Mexican Stock Exchange (BMV) achieved decade-high results in 2023 despite challenges such as elevated interest rates and a scarcity of investments in the capital area. The success of the BMV is reflected in the confidence of both issuers and investors, with Grupo BMV reporting a total issuance of MX$572 billion (US$33.81 billion).

"We had an extraordinary year on the Mexican Stock Exchange in 2023. With issuances for a total amount of MX$$572 billion, growth of 38% in short-term debt and 61% in long-term debt, the BMV continues to lead with 96% of the country's stock market operations. Meanwhile, in relation to the amount, we managed to capture 93% of the share of Mexico's stock market financing. This success reflects the confidence of issuers and investors," shared Grupo BMV.

Regarding short-term debt, 1,242 placements were conducted, amounting to MX$244.70 billion and covering 43% of the market. This marked significant growth of 38.4% compared to the previous year and represented the highest amount raised in the short term in seven years. Notably, the automotive and financial sectors were particularly active in this segment.

For medium and long-term debt, 104 issues were carried out, totaling MX$328.11 billion and representing 57% of the market. This category witnessed robust growth of 60.8% compared to the previous year, reaching the highest level in at least 14 years, according to public records. Major issuers in this category included Grupo Financiero Banorte, BBVA México, América Móvil, Grupo Bimbo, Compañía Federal de Electricidad, and the Special Fund for Agricultural Financing (FEFA).

The total amount raised through bonds on the BMV in 2023 reached MX$572.81 billion (US$33.671 billion), marking a substantial increase of 50.4% compared to 2022 and representing the highest amount since 2013. Grupo BMV emphasized that this success positions the BMV with 96% of the country's stock market operations and secures 93% of Mexico's stock market financing share.

Despite the challenge of high-interest rates, the debt market thrived in 2023 due to the continuous financing needs of companies and public entities. Refinancing requirements surpassed the cost of higher rates, and positive country outlooks driven by trends like supply chain relocation and nearshoring further contributed to the market's vibrancy, reports AXIS Negocios.

Looking ahead to 2024, major Mexican companies are already taking initiatives in the debt market. Cemex, Arca Continental, and BBVA México have initiated debt issues to refinance their liabilities. Cemex aims to secure between MXN$4.5 and MXN$9 billion, BBVA México issued a 15-year subordinated bond worth US$900 million over the first days of the year, and Grupo Bimbo obtained US$1.25 billion in early January. Arca Continental is set to issue two instruments: AC 24 and AC 24-2.

According to Bloomberg, in a scenario of elevated interest rates and speculation about possible reductions, high-yield companies are managing to meet their debt obligations, although options are more limited for speculative grade issuers.