Mexico Bonds Rally as Investors Seek Yield; Peso Little Changed

Mexican peso bond yields fell to the lowest in two weeks as concern that global growth is slowing and the outlook for prolonged low interest rates in developed nations fueled demand for the higher-yielding assets.

Yields on peso bonds due in 2024 fell four basis points, or 0.04 percentage point, to 5.47 percent at 9:52 a.m. in Mexico City, according to data compiled by Bloomberg. The price rose 0.38 centavo to 140.46 centavos per peso. The yield level is the lowest on a closing basis since Aug. 14. The peso was little changed at 13.1731 per dollar.

German business confidence fell for a fourth straight month in August as the sovereign debt crisis curbed growth in Europe’s largest economy, data showed. Mexican bonds, known as Mbonos, are rallying as investors seek higher-yielding assets amid projections for weak global growth, said Vivienne Taberer, who helps manage about $10.3 billion in emerging-market debt and currencies at Investec Asset Management.

“That remains supportive of emerging-market bonds generally,” Taberer said in a telephone interview from Cape Town. “Mbonos -- being one of the bigger, deeper, more liquid markets -- are going to be the beneficiary of that.”

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