Mexico Aims to Issue Bonds in Japan

Mexico, one of the largest issuers of hard-currency debt in emerging markets in 2022, plans to sell “Samurai” bonds as part of its near-future financial strategy, reports Mizuho Securities. The country continues to push new operations in search of adequately accommodating investments and resources.

“A Samurai Bond is a bond issued by a non-Japanese entity in the Japanese market in yen,” according to BBVA. Mizuho Securities was hired to become one of the banks involved in the operation, according to Bloomberg.  The country also hired Daiwa Securities, Mitsubishi UFJ Morgan Stanley Securities, Mizuho and Nomura Holdings Inc. as joint lead managers for a possible yen-denominated offering, said Mizuho Securities.

The company also explained that the country’s notes are expected to be priced in the near future, with the objective of allocating the funds raised through a sale tied to the country's UN Sustainable Development Goals. Mexico's debt sales in international markets have already stood out around the world after expectations predicted a quiet year for sovereign issuance with borrowing costs on the rise.

Mexico offered nearly US$9 billion in debt to investors in 2022, as the issuance of its first samurai bond would represent its first in three years, explained Bloomberg. "It is not punitive that they issue. They still have access to the market, unlike many high-yield issuers," said Edwin Gutierrez, Head of Emerging Market Sovereign Debt, abrdn, according to El Financiero.

In August, Mexico raised US$2.2 billion in funds that the country is seeking to use to finance a public debt buyback. Mexico also sold bonds earlier this year in January and February on euro-denominated sales. The country continues to be one of the few countries in Latin America with an adequate investment-grade in 2022, with other major economies in the region suffering from complex episodes of political uncertainty. Chile, Colombia and Peru have been the most affected countries so far due to their difficult political environments this year.

Mexico’s Ministry of Finance and Public Credit (SHCP) issued the BONDESG in May, 2022, the first sustainable sovereign bond in pesos. The objective relied on developing the sustainable debt market in the country, as reported by MBN.