After the Ministry of Finance and Public Credit (SHCP) placed two new bonds in international markets, Bloomberg highlighted that Mexico’s finances are generating security and confidence among investors.
“Less than a week before the beginning of the year, [Mexico] has already covered more than half of its external financing needs for 2022 and deferred debt payments to bondholders in general through a liability management agreement, which is worth US$5.8 billion. This provides additional security to investors who have been broadly optimistic about the nation’s debt outlook for 2022,” reads a Bloomberg report.
Bloomberg also highlighted that Brazil has decided to focus on a massive injection of fiscal stimulus strategy, while crediting President Andrés Manuel López Obrador’s Administration of curbing additional public spending. Graham Stock, senior strategist for emerging market sovereign debt at UK-based Bluebay Asset Management, which owns Mexican debt, explained that the Mexican strategy will allow the government to maintain the debt profile ‘comfortably.’
Mexico inaugurated the issuance of bonds among emerging economies in international markets with a 12-year bond that will pay a 3.5 percent coupon and a 30-year bond that will pay 4.4 percent for its first external financing program in 2022. The Federal Government last issued debt in April 2020, as SHCP continues to focus on completing the government’s financial plans for 2022 adequately, as reported by MB.
“Mexican bonds were the favorite overweight for 56 percent of the 83 emerging market investors surveyed by Citigroup Global Markets Inc. That is the highest level of overweight for any country, followed by China, which was the 38 percent favorite among respondents,” according to Citi’s Analyst and Leader Dirk Weller.
Mexican bonds successfully outpaced bonds from Brazil, Chile and Peru regardless of the asset reorganization through the newest 12-year and 30-year bonds. Guido Chamorro, Codirector of Emerging Market Currency Debt, Pictet Asset Management, explained that Mexico has turned into a ‘secure’ country to invest in amongst all Latin American countries, even deeming the country as ‘boring’ in reference to its recent stability.