Mexico breaks new ground with 100-year sterling bond

viernes 14 de marzo de 2014 13:18 GYT

By Paul Kilby and Sudip Roy

NEW YORK, March 14 (IFR) - With a new Single A rating under its belt, Mexico (rated A3/BBB+/BBB+) opened up new funding territory last Tuesday, when it printed a rare century bond in sterling, raising £1bn (US$1.7bn) and, arguably, piercing its US dollar curve in the process.

The value of a 100-year has long been called into question but bankers broadly saw it as a successful diversification play for a Latin American country heading into the upper echelons of credit criteria.

"It is our first sterling transaction in almost 10 years and our first in the external markets since Moody's put us in a Single A category," Alejandro Diaz de Leon, the country's head of public credit, told IFR.

The deal marks the country's third 100-year issue - the first two came in US dollars - and follows closely in the footsteps of Electricite de France's century bond in January, when it became the first-ever issuer to go this far up the curve in sterling.

Ever since investors took a shine to EDF's 100-year paper, bankers have been furiously pitching the idea to qualified borrowers. These included Mexico, which was seen as one of the few, if not the only, LatAm sovereign ready and willing to test this tenor.

"The success of the EDF deal surprised a lot of people in terms of the strong demand and the size achieved," said Jonathan Brown, head of fixed-income syndicate, Europe at Barclays, which acted as lead, along with Goldman Sachs. "Everyone has been trying to find a way to replicate that trade and find issuers that would like to do that."

The Mexico trade stemmed, in part, from some reverse enquiries and was placed mostly with UK investors, some of whom were unable to take exposure to the Latin American country before this year's upgrade.

"It was important for us to go to a different pool of investors, dedicated long-term sterling," said Diaz de Leon. "We haven't gone to this market for quite some time."   Continuación...