(ADDS deal details, quotes)
By Paul Kilby
NEW YORK, Feb 16 (IFR) - Mexico launched a 2.5bn dual-tranche bond on Tuesday as hopes of more monetary easing in Europe buoyed market sentiment and cleared a path for the Latin American sovereign.
The deal is the region's first bond sale in either euros or dollars in over two weeks, after recent bouts of volatility in the broader markets closed doors to borrowers worldwide.
Despite more complicated market conditions, Mexico was able to garner a decent size, equaling a 2.5bn dual-tranche bond sale it completed last February.
Stability in oil prices and comments on Monday from ECB President Mario Draghi, who said he was prepared to ease monetary policy further in March, have brought some comfort to an investor base hurt by recent price swings.
"The new issue market is open," a banker away from the deal told IFR. "Draghi has helped reinvigorate the expectation of additional quantitative easing from the ECB."
The sovereign set pricing on a 1.5bn six-year bond at mid-swaps plus 180bp, the tight end of guidance of 180bp-185bp and inside initial price thoughts of plus 190bp area.
It also launched a 1bn 15-year at mid-swaps plus 245bp, tight to guidance of 250bp area and initial talk of 255bp area.
At those levels, the six-year is coming some 20bp over its curve, according to the banker, who spotted the existing 2021s and 2023s trading at I-spreads of 138bp and 177bp.
It is a similar story on the 15-year, which at 245bp is coming around 15-20bp over the curve, where the existing 2029s had been trading at 214bp.
By going to the euro market, Mexico is continuing its strategy of diversifying its funding base at a time when market access and costs are less certain.
Chile, rated Aa3/AA-/A+, did the same in mid-January, when it issued bonds denominated in dollars and euros. Its 1.25bn 2026 was being quoted on Tuesday at an I-spread of around 98bp.
Peru, rated A3/BBB+/BBB+, tapped the euro market in October for the first time in more than 10 years with a 1.1bn 2026. That bond was being quoted at an I-spread of 224bp.
Mexico's deal, which is rated A3/BBB+/BBB+, was expected to price later Tuesday through leads Barclays, BNP Paribas, Credit Suisse and UBS. (Reporting by Paul Kilby; Editing by Marc Carnegie)