Mexican Peso Rallies on $20.1 Billion Corona Brewer Purchase

Mexico’s peso gained the most in six months after Anheuser-Busch InBev NV (ABI) agreed to buy the remainder of Grupo Modelo SAB for $20.1 billion in cash, spurring speculation the brewer will move dollars into the country to fund the purchase.

The peso appreciated 1.9 percent to 13.3608 per dollar at 4 p.m. in Mexico City, the biggest gain since Jan. 3. The rally pared the currency’s loss this quarter to 4.1 percent. It’s up 4.3 percent in 2012.

“It’s the expectation of a payment flowing into the country,” Eduardo Suarez, a currency strategist at Bank of Nova Scotia (BNS), said by phone from Toronto. “Even a portion of that amount of money would be very supportive for the peso.”

The currency gained as the purchase price for Modelo, the brewer of Corona beer, exceeded expectations, Suarez said. AB InBev said today it will pay $9.15 a share, about 30 percent more than the price of Modelo shares before talks were first disclosed June 25.

The world’s biggest brewer said that it will fund the acquisition with $14 billion of new loans. Laura Vallis, a spokeswoman for AB InBev, declined to comment in an e-mailed statement about the amount of cash the deal would bring into Mexico.

The peso also rallied along with other emerging-market currencies as European leaders reached an agreement that alleviated concern that banks will fail. After talks that ended early today in Brussels, leaders of the 17 euro countries dropped requirements that taxpayers get preferred creditor status on aid to Spain’s banks and opened the way to recapitalize lenders directly.

Speculation that Europe’s debt crisis will slow global growth and hurt the market for Mexican exports helped make the peso Latin America’s worst-performing major currency in 2011.

Mexico Election

The peso posted a weekly rally of 3.8 percent, the biggest since December, before July 1 presidential elections.

The final pre-election poll from Consulta Mitofsky shows Enrique Pena Nieto of the Institutional Revolutionary Party with 38.4 percent support, followed by Andres Manuel Lopez Obrador of the Democratic Revolution Party with 25.4 percent and the ruling National Action Party’s Josefina Vazquez Mota in third at 20.8 percent support.

The poll’s margin of error is 3.1 percentage points. Mitofsky interviewed 1,000 registered voters from June 22 to June 24.

Lopez Obrador held his final campaign rally on June 27 in the capital’s main square, known as the Zocalo. Supporters of the former Mexico City mayor shut down the area after presidential elections six years ago, claiming fraud in President Felipe Calderon’s victory by less than a percentage point.

The yield on Mexican local-currency bonds due in 2024 fell 10 basis points, or 0.10 percentage point, to 5.51 percent, according to data compiled by Bloomberg. The price rose 1.19 centavo to 140.45 centavos per peso.

To contact the reporter on this story: Ben Bain in New York at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.