Peru Bonds Outperform Mexico’s Debt on Growth, Slower Inflation
Peru’s dollar-denominated bonds are outperforming emerging market debt sold by countries including Mexico as four years of economic growth and record low inflation lure investors.
Putman Investments and Standish Mellon Asset Management Co. are among investors buying Peru’s bonds, betting the nation’s credit ratings will rise. President Alejandro Toledo has helped spur 48 straight months of economic expansion, the second-best performance in Latin America, and cut the inflation rate to a three-year low of 1.2 percent. Surging exports of gold and copper are buoying growth in a country where mining and hydrocarbons account for 6 percent of gross domestic product.
“Peru’s next in line for an upgrade,'’ said Jeffrey Kaufman, who manages about $1 billion of emerging market debt, including Peruvian bonds, for Putnam in Boston. “The macroeconomics are very supportive.'’
The 9.5 percent return on Peru’s bonds this year through Sept. 9 tops the 7.5 percent return on Mexico’s dollar- denominated government bonds and 8.6 percent return on Merrill Lynch & Co.’s emerging market sovereign dollar-denominated bond index.
More: quote.bloomberg.com
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's Televisa replaces $600 mln in debt
Mexico's No. 1 broadcaster Televisa said on Wednesday it had successfully replaced $600 million in existing debt with identical new paper in a technical operation to comply with U.S. market regulations.
Televisa (TLVSCPO.MX: Quote, Profile, Research) (TV.N: Quote, Profile, Research) said its month-long offer to exchange debt with a coupon of 6.625 percent and maturing in 2025 for identical new paper closed on Tuesday.
"The total amount of old debt was exchanged for new bonds, corresponding to $600 million in new bonds issued today, September 7, 2005," Televisa said.
The operation was a purely technical one
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
Mexico Bonds May Extend Rally as Oil Prices Gain, Rating Rises
Mexico's U.S. dollar-denominated bonds may extend a 3 1/2-month rally as the country benefits from record oil prices and improving credit quality.
``We're more optimistic on Mexico relative to the market as a whole,'' said Christian Stracke, an emerging-market debt strategist at New York-based CreditSights Inc. ``The emerging- markets sector as a whole is overbought and we've seen it starting to pull back a bit. As the market pulls back, safer credits like Mexico tend to outperform.''
Record oil prices helped Mexico, the world's fifth-largest oil producer, boost international reserves
Mexicos Urbi sells $150 mln in 10-yr bonds
Mexican homebuilder Urbi (URBI.MX: Quote, Profile, Research) on Monday said it has placed $150 million in 10-year senior bonds in the U.S. market.
Urbi, one of Mexicos largest house construction firms, said it planned to use proceeds from the 8.5 percent, 2016 maturing bond to refinance debt and fund other corporate activities.
The bonds, offered to institutional investors in the United States and other countries, have been rated BB by Standard and Poors and Fitch ratings and BA3 by Moodys.
More: today.reuters.com
Brazil, Chile, Mexico, Peru: Latin America Local Bond Preview
The following events and economic reports may influence trading in Latin American local-currency bonds today. Bond yields are from the previous session.
Argentina {ARGENT }: Argentina's currency weakened 0.2 percent, its fifth straight decline, to 3.06 pesos per U.S. dollar as Argentines traveling abroad during the summer months buy foreign currency.
The yield on Argentina's 5.83 percent bond maturing in 2033 remained unchanged at 6.19 percent, according to Banco Mariva in Buenos Aires. {ARARGE03E121 DES }.
Brazil {BLTN }: Brazil's real rose for a second day on speculation companies
Mexicos Peso Falls to Eight-Week Low Amid Inflation Concerns
Mexicos peso dropped to an eight- week low against the dollar and local-currency bonds fell on expectations inflation quickened last month.
The peso fell as much as 0.6 percent today before a report that is expected to show consumer prices rose 0.44 percent last month, the biggest increase in seven months, according to the median forecast of 16 economists in a Bloomberg survey. Accelerating inflation decreases the value of peso-denominated assets.
The inflation number today is going to look pretty bad, said Raul Rodriguez, head of economic analysis at Mexico City- based
Mexico to Save $350 Million After Prepaying Debt, Garcia Says
Mexico will save as much as $350 million after borrowing in domestic markets to pay $12.4 billion of foreign debt ahead of schedule, Deputy Finance Minister Alonso Garcia Tames said.
The government yesterday sold local bonds to pay $9 billion of debt owed to the World Bank and Inter-American Development Bank and to buy back $3.4 billion of dollar-denominated bonds. Mexico raised more money from the sale than the $7 billion it originally sought.
This transaction has contributed to the perception that the outlook for Mexican debt is positive, Garcia
Mexico Fixed-Rate Bond Yields to Rise on Inflation, Moreno Says
Mexico's fixed-rate peso bond yields may rise in 2006 as the inflation rate climbs from a record low, said Salvador Moreno, chief economist at ING Groep NV's Mexican unit.
The yield on fixed-rate bonds may rise as much as 30 basis points, or 0.3 percentage point, as higher-than-expected consumer price increases drive down already ``tight'' valuations, Moreno said. The annual inflation rate may climb as high as 3.9 percent in January, more than the 3.5 percent expected by many fund managers, he said.
``There's a risk that inflation expectations rise
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
