Mexico President Claudia Sheinbaum. — Bloomberg
MEXICO CITY: Mexico is kicking off Latin American bond offerings for the year, selling a record amount of debt just as the government vows to rein in spending, while grappling with a weakened peso ahead of Donald Trump’s inauguration.
The country is seeking to sell US$8.5bil in a three-part deal, according to people familiar with the matter. That’s more than half what the nation’s budget allows the sovereign to raise in hard currency debt this year.
The sale, Mexico’s first under President Claudia Sheinbaum, comes after Mexican lawmakers passed a budget bill that seeks to reduce a financial deficit while also maintaining support for state oil driller Petroleos Mexicanos.
It also comes just weeks ahead of Trump’s inauguration for a second term.
The prospect of the Republican returning to the White House has roiled emerging market currencies, especially the peso, as traders weigh the impact of higher tariffs on global interest rates and the US dollar.
It was the second high profile deal in developing nations of the day.
Saudi Arabia, one of the largest bond issuers in emerging markets last year, is also selling eurobonds in another three-tranche transaction.
“The floodgates are open,” said Guido Chamorro, co-head of emerging market hard currency debt at Pictet Asset Management in London.
“Mexico has large funding needs and it makes sense to issue before the new US administration takes office.”
Mexican assets took a hit last year after an overhaul of the judicial system spooked investors and as Trump vowed to impose steep tariffs on all of the country’s products.
Sheinbaum, who spoke to Trump in a November phone call, said she’s convinced a deal would be reached to avoid levies.
Still, the peso posted its worst year since the 2008 global financial crisis, while Mexico’s dollar debt handed investors an average loss of 3% in 2024, lagging an index of developing-world peers, data compiled by Bloomberg show. — Bloomberg
