Mexico Sells 20-Year Peso Debt to Yield 9.7 Percent (Update1)
Mexico, the nation with Latin America’s biggest economy, paid its lowest borrowing cost since April 2004 at a government auction of 20-year peso-denominated bonds on speculation the central bank will lower interest rates as inflation slows.
Mexico sold 2 billion pesos ($189 million) of 10 percent peso bonds that mature in December 2024 for a price of 1.0259 centavos on the peso. At that price, the bonds yield 9.7 percent, the lowest for a 20-year bond since 9.67 percent on April 15, 2004.
“Money is tight and inflation has gone down much faster than most people expected,'’ said John Welch, chief Latin America economist at Lehman Brothers Holdings Inc. in New York in a telephone interview. “You would think the borrowing costs would come down and that’s pretty much what has happened.'’
More: bloomberg.com
Mexico 1-month T-bill yield rises to 7.02 pct
The yield on Mexicos benchmark 28-day Cetes, or T-bills, edged up 1 basis point to 7.02 percent on Tuesday amid expectations of rising U.S. interest rates.
Longer-term Cetes yields ticked up from last week at a central bank auction, along with rates on Mexicos 3-year and 7-year peso from when they were last auctioned on May 16.
The yield on the three-month bill rose to 7.36 percent from 7.28 percent last week, while the yield on the six-month yield rose to 7.63 percent from 7.50 percent.
The 3-year peso bond rose to a yield of 8.50
Mexico Sells Warrants to Swap $2.5 Billion of Bonds
Mexico sold securities that allow investors to swap about $2.5 billion of the nation's dollar- denominated bonds for peso debt next year, a person familiar with the offering said.
Investors paid $65 million for warrants that can be turned in along with Mexican dollar bonds that mature between 2007 and 2033 in exchange for peso securities due in 2011, 2014 and 2024, the person said.
The sale is part of a government effort to shift more of its financing to the domestic market, helping reduce its vulnerability to declines in the
Mexico 28-day T-bill yield tumbles to 8.14 percent
The yield on Mexico's benchmark 28-day Cetes, or T-bills, tumbled 28 basis points to 8.14 percent on Tuesday as markets reacted to a sharp central bank interest rate cut last week aimed at boosting growth.
Longer-term rates also fell at the central bank auction.
The yield on 91-day Cetes dropped to 8.12 percent from 8.38 at last week's auction, while the 175-day yield fell to 8.13 percent from 8.34 percent.
Further along the yield curve, the 5-year peso-denominated bond fell to 7.88 percent from 8.36 percent when it was last auctioned on Nov. 15.
The market
Mexico's Bonds Have `Value' After Yields Climb, ABN Amro Says
Mexico's peso-denominated bonds may rebound after yields on the 10-year security rose 42 basis points since March 1, said Siobhan Manning-Morden, director of Latin American strategy at ABN Amro Inc.
Bond yields, which move in the opposite direction from prices, climbed this month on concern rising interest rates in the U.S. and other industrial countries will lure investors away from emerging markets. Manning-Morden says investors should hold onto Mexican peso bonds because the difference between long-term yields on U.S. and Mexican debt is still wide enough.
``I don't think it's
Currency Strategists: BNP Says Mexico's Peso May Fall
The Mexican peso, up 4.5 percent versus the dollar this year, will drop in 2006 as the central bank cuts its benchmark interest rate amid slowing inflation, said Rafael de la Fuente, chief economist for Latin America at BNP Paribas SA.
The peso has dropped 1.4 percent since the central bank lowered its key rate by a greater-than-expected half a percentage point to 8.25 percent on Dec. 9, the fifth reduction since August. Mexico's currency may also decline on concern lower rates will reduce the yield advantage of domestic bonds.
``We still
Mexico's Peso Declines to 2-Week Low on Rate Cut Expectations
Mexico's peso fell to a two-week low on expectations that the coutnry's central bank this week will cut interest rates for a third time in three months.
The peso has declined 1.6 percent in five days ahead of the Bank of Mexico's Oct. 14 policy meeting. The bank has cut the overnight lending rate twice since August to 9.25 percent, a half percentage point from a 29-month high of 9.75 percent. Rising yields in the U.S. are also contributing to the peso's weakness, said Suhas Ketkar at RBS Greenwich Capital
UPDATE 1-Mexico 28-day T-bill yield edges down to 7.98 pct
The yield on Mexico's benchmark Cetes, or T-bills, edged down for the 23rd straight week on Tuesday amid investor expectations that the central bank will push interest rates lower again this month.
The rate on 28-day paper fell four basis points to 7.98 percent while the rates on three-month and six-month paper also fell.
An earlier Reuters survey of Cetes dealers had forecast the 28-day Cetes rate would fall two basis points to 8.00 percent while longer-term T-bill yields would fall slightly or hold steady.
The yield on the 10-year peso denominated bond
UPDATE 1-Mexico 28-day T-bill yield falls to 7.92 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, dropped six basis points to 7.92 percent on Tuesday as investors saw the central bank cutting interest rates further despite an uptick in inflation.
The rate on 90-day Cetes fell 12 basis points to 7.84 percent while the yield on six-month paper dropped 11 basis points to 7.77 percent.
An earlier Reuters survey of Cetes dealers had predicted the 28-day Cetes rate would fall eight basis points to 7.90 percent and that longer-term T-bill yields would also fall.
The yield on the 5-year peso-denominated bond
Mexico to Swap Bonds Today to Lower Foreign Debt
Mexico will swap foreign-currency bonds for domestic securities today, the first part of a planned $3.3 billion exchange aimed at making the countrys finances less vulnerable to declines in the peso.
In todays transaction, investors can turn in as much as $500 million of dollar bonds in exchange for peso debt. Investors in November bought warrants from the government that gave them the option to turn in their dollar bonds for peso bonds. In March, the government sold similar warrants to holders of some bonds denominated in European currencies.
The swaps
Mexico 28-day yield seen rising at weekly auction
The yield on Mexicos benchmark one-month T-bills was expected to rise on Tuesday as investors rattled by recent peso volatility struggled to predict the U.S. Federal Reserves next monetary policy move.
Yields on three- and six-month T-bills, or Cetes, were also seen rising, but the yield on the governments 10-year peso bond was expected to change little from the last time it was auctioned on Aug. 15. according to a Reuters poll.
Following is a table comparing previous rates at the central banks primary auction with expectations for this weeks sale and the expected change
