UPDATE 2-Mexico returns to dollar bond market with blowout trade
(Makes changes throughout)
By Paul Kilby
NEW YORK, Aug 8 (IFR) - Mexico returned to the dollar market for the first time in eight months on Monday with a blowout US$2.76bn two-part bond that generated over US$10bn in demand.
Positive sentiment following Friday's payrolls number and a recovery in crude prices presented an opportunity for the oil exporter, as it sought to redeem about US$2.76bn in January 2017 bonds.
The deal - comprising a tap of the existing 4.125% 2026s and a new 2047 bond - proved a hit among accounts still on the hunt for yield despite heightened expectations that the Federal Reserve will hike rates again this year.
"There was a nice reaction to the payroll number," said a DCM banker. "It bumped up expectations about when the Fed might move but it doesn't change the path of rates."
Indeed a US$6.9bn book on the new US$2bn 30-year only underscored investors willingness to take on more duration, particularly through higher quality credit like Mexico (A3/BBB+/BBB+).
Such demand allowed leads to launch the US$2bn 30-year at a spread of 205bp, some 20bp inside initial price thoughts of 225bp area.
"Mexico remains a high quality story so you wouldn't expect them to offer a massive amount of concession," Sean Newman, a senior portfolio manager at Invesco, told IFR. "(But) we think it only makes sense at 210bp." Continuación...