Lower borrowing costs at home, big repayment walls coming due and a fast-growing pool of pensions and insurers have pulled issuers back to Mexico's peso market. Many stayed quiet last year amid trade worries and geopolitical conflicts. Now they are returning in size. Banorte's tally shows long-term issuance by non-bank corporates hit 234.8 billion pesos through September, already the highest full-year figure since the bank began keeping records in 2004.
"We're noticing a great deal of openness among investors to these placements," said VALMEX Casa de Bolsa's Yazmín Matus, who is the deputy director overseeing debt markets. She said the strong bid has often let companies come at narrower spreads than first flagged. Over the past month, the electricity commission CFE placed 20 billion pesos, while a Grupo Lala unit secured 9 billion pesos.
Companies rush to borrow locally when they expect rates to fall. Market Briefs covers emerging market debt free every weekday.
"It used to be difficult to issue, say, 10 billion in Mexico," he said, citing the "unprecedented" Pemex issuance as a sign of how much has changed. "It is a positive sign that companies are beginning to find the market depth they are looking for," he added. Even so, investors are still choosy.
MercadoLibre Inc.'s Mexico lending unit targeted 5 billion pesos and placed 3.75 billion pesos. In a statement, the company said it is "pleased" with both the sums raised and the rates achieved, and highlighted robust interest from local pension funds and insurers, plus private banks, corporate treasuries, qualified funds, and development banks.
Banorte expects the faster pace to carry into October and November, supported by a heavy slate of maturities and a seasonal pickup in activity, according to analyst Gerardo Valle. On deck: real estate investment trust Fibra Educa plans to reopen bonds it sold in June, and Banorte anticipates sizable offerings from Fondo Especial para Financiamientos Agropecuarios and Toyota Financial Services Mexico. For everyday investors, the headline is simple: local companies are leaning on the home market as conditions improve, and the biggest names are finding plenty of buyers.
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