Mexico’s Bond Yields Tumble on IMF Proposal; Peso Advances
Mexico’s benchmark peso bond yields fell to a 10-week low as an improving global economic outlook fueled investor demand for emerging-market assets.
The yield on Mexico’s benchmark peso-denominated bond due in 2024 dropped nine basis points, or 0.09 percentage point, to 6.38 percent in Mexico City, according to data compiled by Bloomberg. The yield is the lowest since Nov. 8. The price of the securities, known as Mbonos, rose 0.95 centavo to 131.72 centavos per peso. The peso posted its biggest gain in two weeks.
The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to insulate the global economy against any worsening of Europe’s debt crisis. Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved.
“Compared to where U.S. Treasuries are, Mbonos are still trading pretty cheap because there’s quite a bit of risk aversion priced in,” Ram Bala Chandran, a Latin American currency and rates strategist at Citigroup, said in a telephone interview from New York. “With global markets seemingly calm, that premium is basically being taken out.”
Mexico’s peso bonds due 2024 yield 419 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg.
The peso surged 1 percent to 13.3089 per U.S. dollar, from 13.4381 yesterday. It’s appreciated 4.7 percent this year.
To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
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