Yields on Mexican peso-denominated bonds rose to a seven-week high as concern that Greece’s debt writedown may be rejected by many private creditors this week eroded demand for emerging-market securities.
The yield on the debt due in 2024 rose three basis points, or 0.03 percentage point, to 6.58 percent at 4 p.m. in Mexico City, according to data compiled by Bloomberg. It was the highest close since Jan. 11. The price of the securities fell 0.30 centavo to 129.48 centavos per peso.
The success of the debt swap, confirmed on the eve of last week’s European Union summit, depends on how many investors agree to the writedown by a March 8 deadline. Mexico’s local bonds rallied at the beginning of this year as investors boosted holdings of the country’s fixed-income assets in part on speculation that European leaders would resolve the region’s sovereign debt crisis.
“It has to do still with this European problem and the Greek exchange and the uncertainty that still exists around that,” Alejandro Urbina, who oversees $800 million of assets at Silva Capital Management, said by phone from Wilmette, Illinois.
Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate if necessary, Finance Minister Evangelos Venizelos said.
Mexico sold $2 billion of dollar-denominated bonds today to yield 4.84 percent, or 170 basis points above similar-maturity U.S. Treasuries, according to data compiled by Bloomberg.
The peso fell 0.6 percent to 12.8354 per U.S. dollar, from 12.7599 on March 2. The currency has gained 8.6 percent this year.