Mexico Will Probably Raise 2010 Growth Forecast After IMF, Cordero Says

Mexico’s government is likely to raise its 2010 economic growth forecast following an increased estimate from the International Monetary Fund, Finance Minister Ernesto Cordero said.

The government’s current growth projection is 4.1 percent, Cordero said in an interview with Bloomberg Television in London today. Its new forecast may come in the next few weeks, he said, declining to give details.

Latin America’s second-biggest economy will expand 4.5 percent in 2010, up from a previous estimate of 4.2 percent, the Washington-based IMF said in a report. Mexico’s economy is being supported by an advance in worldwide trade that benefits commodity exporters, the IMF said. Mexico is the largest oil producer in Latin America.

The IMF forecast increase “is very important because it reflects what the international markets perceive of the Mexican economy, that we’re improving month by month, week by week,” Cordero said. “The forecast of the Mexican government is 4.1 percent, and we believe we will be able to improve it.”

Mexican economists are forecasting gross domestic product will rise 4.4 percent this year, according to a monthly central bank survey.

The peso rose 0.4 percent to 12.7860 per dollar at 9:37 a.m. New York time. The Mexican currency is up 2.4 percent this year, the second-best performance against the dollar among the 16 most-traded currencies after the Japanese yen.

‘Sound Fundamentals’

Mexico may sell about 700 million euros ($888 million) of bonds “very, very soon,” Cordero told reporters today. The bonds will mature in 5 to 10 years, he said.

“We will be able to issue these bonds in very positive conditions and also with a very good yield,” he said. “It’s part of the strategy of refinancing our debt. Now there are opportunities in the European markets and probably we will be able to take advantage of it.”

The finance minister said Mexican peso bond yields are decreasing as international investors see the emerging market as less risky.

“The perception of risk of the Mexican economy is decreasing,” Cordero said. “We have sound fundamentals, macroeconomics are quite strong, the external driver of the Mexican economy is very, very solid and we are beginning to have a takeoff of the internal side of the Mexican economy.”

The yield on Mexico’s 10 percent peso bond due in 2024 may plunge to 6.5 percent by year-end, said Alonso Madero, who helps manage 66 billion pesos ($5.1 billion) at Corp. Actinver SAB in Mexico City. The yield fell to a record of 7.02 percent at 9:36 a.m. New York time today and has dropped 125 basis points this year.

Cordero also said the government is likely to continue with its oil hedging strategy next year and will make a decision in the coming weeks.

To contact the reporters on this story: Laura Price in London at lprice3@bloomberg.net; Juan Pablo Spinetto in London at jspinetto@bloomberg.net.

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