Mexico issues $7.5 billion in debt and becomes the world’s largest issuer among its peers

Mexico’s Finance Ministry announced on Tuesday night that it made its “largest debt placement in recent history” in international markets. The country placed $7.5 billion in sovereign bonds as part of President Andrés Manuel López Obrador’s plan to increase debt and finance more spending during this election year. With this, the country becomes “the largest sovereign issuer with a BBB rating at a global level,” the Government said.

After Tuesday’s market sale, Mexico becomes the largest sovereign issuer with a BBB rating, considered the lowest investment grade by the world’s largest credit risk agencies, according to the Mexican Finance Ministry, and had a demand almost triple the amount offered. Other countries rated BBB are Indonesia, Hungary and Italy.

“Favorable financial conditions were obtained, which translate into a lower financial cost for the country compared to previous months,” the Ministry said in a short statement. “The transaction not only improves the liquidity and efficiency of the dollar bond yield curve, but also sets a positive precedent for future Mexican public and private sector issuers throughout the year,” it added.

The bonds were placed in three segments: a five-year bond that will pay a rate of 5.07%, 37 basis points cheaper than in January 2023, according to the Ministry, with a coupon of 5% for an amount of $1 billion; a 12-year bond that will pay a rate of 6.09%, 30 basis points cheaper than a year ago, with a coupon of 6% for an amount of $4 billion; and a 30-year bond that will pay a yield rate of 6.45%, 11 basis points more expensive than the bonds issued in April of last year, with a coupon of 6.4% for an amount of $2.5 billion.

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