Mexico placed a 1.6 billion euro ($2.09 billion) bond on Tuesday, securing its biggest-ever issue in the euro currency as well as a record low yield, the finance ministry said. "It will be a very important benchmark," Alejandro Diaz de Leon, the head of the Finance Ministry's debt office, told Reuters after the issue, Mexico's first in euros since mid-2010.
The 10-year bond with a coupon of 2.75 percent priced with a yield of 2.81 percent, and saw 2.8 times the demand of the amount on offer, the Finance Ministry said in a statement. Mexico swapped 459 million euros of less-liquid debt with shorter maturities for the new bond, the ministry said.
Latin America's second biggest economy issued about $5 billion of new foreign currency debt in 2012, including a landmark unsecured yen bond worth about $1 billion. Strong demand helped Mexico clinch record low interest rates. Diaz de Leon said Mexico was focusing on maintaining a strong presence in the yen, dollar and euro debt markets.
"Even if we do not rule out exploring other currencies, the reality is that given we have quite limited room to issue in external markets, we try to make sure that our transactions make an important contribution, as an important and liquid benchmark, which helps us keep a regular presence in these markets and act as a reference for other local issuers," he said. "We have done long-term dollars, now we have done euros, and we continue monitoring conditions in different markets to see what other alternatives there are," Diaz de Leon said. Mexico's Congress has approved foreign currency debt issues of up to $7 billion for 2013, and the government already issued $1.5 billion in 30-year dollar bonds in early January.