Bond Traders Reap Windfall From Gold Surge as Mexico Miner Soarsby
Penoles generates more than 40% of its revenue from gold
The company’s dollar notes have jumped 15.4% this year
Industrias Penoles is handing bondholders some of the biggest gains in emerging markets as the price of gold soars.
Its $600 million of bonds have returned 15.5 percent this year, the most in Mexico and more than double the average gain on debt from developing-nation companies.
Penoles relies on gold for more than 40 percent of its sales, making it the miner’s biggest source of revenue. The precious metal has jumped 20 percent this year as the U.S. dollar weakened amid speculation slowing global growth will cause the Federal Reserve to delay interest-rate increases. Gold is rebounding after plunging to a six-year low in December, when it was part of a global selloff in commodity prices. The rout had caused Mexico City-based Penoles’s benchmark notes due in 2020 to tumble to their lowest ever in February.
“Gold’s comeback in the beginning of the year explains the bond’s positive trend,” Edgar Cruz, an analyst at Banco Bilbao Vizcaya Argentaria SA, said from Mexico City.
Gold for June delivery was little changed at $1,271.70 an ounce as of 12:31 p.m. in New York.