Mexican Bond Yields Reach Five-Week High on Greece

(Corrects peso prices in fifth paragraph.)

Mexican bond yields touched a five- week high as Greece’s political leaders failed to form a new government, damping demand for the Latin American nation’s higher-yielding assets.

The yield on Mexican local-currency bonds due in 2024 was 6.391 percent at 4 p.m. in Mexico City. It’s the highest closing level since April 6. The price fell 0.01 centavo to 131.12 centavos per peso.

“There’s been a strong risk aversion in international markets,” Alejandro Padilla, a debt strategist at Grupo Financiero Banorte-Ixe, said in a telephone interview from Mexico City. “Mexico doesn’t find itself in a situation like the majority of the countries in Europe, including many developed and emerging-market nations. However, clearly investors are seeing all emerging markets as risky assets.”

Investors have pared demand for longer-term, fixed-rate Mexican denominated bonds over the past week, with yields rising 17 basis points, amid deepening concern that Europe’s financial woes are worsening. Greece will hold new elections after President Karolos Papoulias failed to broker the creation of a government following an inconclusive May 6 vote, Pasok leader Evangelos Venizelos said today.

The peso slid 0.7 percent to 13.8363 per U.S. dollar, from 13.7344 yesterday. It earlier touched 13.8431, the weakest level since Jan. 3.

Mexico sold all 7 billion pesos ($506 million) of 28-day Cetes and 8 billion pesos of the 91-day securities it offered today, the central bank said on its website. Mexico also sold all 8.5 billion pesos of the 182-day bills it auctioned.

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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