Mexico sold the world’s first 100-year government notes in euros and its third so-called century bond as the nation seeks to lock in lower borrowing costs amid the European Central Bank’s unprecedented stimulus.
The country offered 1.5 billion euros ($1.62 billion) of debt due in March 2115 with a 4.2 percent yield to maturity, according to a statement from the Finance Ministry. Yields on Mexico’s 30-year euro bonds sold in February have fallen 0.32 percentage points since the debt started trading to 2.77 percent as of 3:22 p.m. in New York.
Countries and companies from Bulgaria to China are taking advantage of falling borrowing costs in Europe, issuing 20 billion euros ($21.7 billion) in the first three months of this year to cap the second-busiest quarter for emerging-market bond sales in a decade as the ECB started a 1.1 trillion-euro bond-buying program. Mexico’s offering in euros follows its sale of 1 billion pounds ($1.49 billion) of 100-year debt last year and has sold $2.68 billion of century bonds since 2010.
“It’s a good opportunity to lock in ultra-long-term financing at rates well below where they issued in dollars and pounds,” Richard Segal, the head of emerging-market credit strategy at Jefferies International in London. Mexico’s 100-year bond in pounds was sold to yield 5.75 percent, while the dollar securities were issued at 6.1 percent.
In Europe, the ECB’s policies have allowed countries including Germany and Switzerland to sell debt at negative yields, meaning investors buying the securities now will get less than they paid when the debt matures.
The “ECB bond-buying program has opened up a great opportunity,” Angelo Rossetto, a trader at GMSA Investments Ltd. in London, said by e-mail. “There is definitely more demand now for longer-dated bonds.”
Mexico, the first sovereign to offer debt of 100 years in euros, follows similar sales by companies including GDF Suez in 2011 and Bayer AG in 2005, according to Bloomberg data.
Natural buyers of these bonds would be insurance companies based in Europe in search of investment-grade debt offering higher yields than shorter-maturity notes, according to Michael Roche, a strategist at Seaport Global Holdings LLC.