Mexico Continues Refinancing StrategyBy Emilio Aristegui | Thu, 10/28/2021 - 16:06
Mexico’s Ministry of Finance and Public Credit (SHCP) announced a cross-swap of government securities in the local debt market as the country seeks to ensure the optimization of the maturity profile and the recalibration of portfolios.
“The refinancing operation, which reached historic levels for a transaction of its kind, consisted of the exchange of government securities for an amount of MX$212 billion (US$10.40 billion) between the Ministry of Finance and institutional investors. The total demand was MX$231 billion (US$11.33 billion),” reads an official SHCP press release.
The operation allowed the Federal Government to extend its debt maturity profile, while also reducing liquidity pressures by MX$159 billion (US$7.8 billion). The major outcome of the operation is that the Federal Government will now have more flexibility regarding future placement programs.
SCHP clearly highlighted that the operation does not represent indebtedness, as the Ministry always kept in mind the debt ceilings approved for 2021 by Congress for the fiscal year. Institutional investors participated in the operation, which involved the local debt market. The Ministry of Finance bought M Bonds and Udibonos maturing between 2021 and 2023, while selling M Bonds, Udibonos and F bonds with maturity between 2024 and 2031.
With this restructuration, the Ministry of Finance had two major objectives in mind: “To optimize the maturity profile of the Federal Government’s domestic debt and to allow holders of government debt to recalibrate their debt portfolios to help preserve the proper functioning of the debt market,” according to the press release. SCHP also assured that it is constantly monitoring financial markets’ conditions to guarantee the healthy development of the local debt market. According to the SCHP, the Mexican government continues to work by the public policy objective standards to have healthy and sustainable public finances.
Banxico also informed on the results of the auction of Government Securities Swap by specifying the transactions, which included nine government securities to be received by bidders and six government securities to be delivered by bidders, according to an official press release by the Bank of Mexico.