Mexico Raises 2.5 Billion Euros in Bond Sale to Finance Deficit

  • Government sold benchmark-sized notes due in 2022, 2031
  • Latin American nation raised $2.25 billion in January

Mexico sold 2.5 billion euros ($2.8 billion) in bonds, its second foreign debt sale this year, to finance a widening budget deficit as the tumble in crude prices saps government revenue.

The government issued 1.5 billion euros of six-year notes to yield 1.98 percent, and 1 billion euros of 15-year bonds with a 3.42 percent yield, the Finance Ministry said in an e-mailed statement.

Mexico, which is reliant on crude for nearly 20 percent of federal revenue, sold $2.25 billion in 10-year notes in January, part of a plan to raise as much as $6 billion overseas in 2016. The country is taking advantage of reduced costs to issue overseas debt after the yield on Germany’s 10-year bunds, the region’s benchmark sovereign securities, dropped to the lowest since April this month as the global economic slowdown boosted demands for assets seen as a safe haven. The European Central Bank’s signal that it may increase stimulus as early as next month also boosted the appeal of government bonds.

"The timing is good," said Jorge Unda, who oversees about $35 billion as chief Latin America investment officer at for BBVA in Mexico City. “There are low interest rates, generally, in Europe so there is good appetite for premiums, especially from countries with good fundamentals such as Mexico."

After Tuesday’s sale, Mexico has now covered 80 percent of its external financing planned for this year, according to the Finance Ministry statement. Demand for the bonds was 1.76 times the amount offered, it said.

The country was the world’s first sovereign to sell a 100-year bond in Europe’s shared currency last year.

The yield on its euro notes due in March 2024 rose 0.05 percentage point to 2.26 percent as of 3 p.m. in New York.

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