19 October 2010

Is Mexico a 100 Year Bet?

The FT' congratulates Mexico on selling $ 1 bn of 100 year notes at 6.1 %, but suggests in the Lex column that this may be "a triumph of hope over experience". Interesting question. What do readers of this blog think?
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2 comments:

  1. Genevieve SignoretOctober 20, 2010 at 11:14 AM

    Black Swan,

    Clients, audience members at a speaking engagemente in Ciudad Juárez, and members of the press have been asking my take on this bond issue. My answer is three-part: (

    (1) It's a sign that emerging market spreads are tightly compressed, product of the ongoing search for yield.

    (2) It reinforces Mexico's already strong reputation as possessing at Hacienda brilliant sovereign debt managers. Which in turn supports Mexican sovereign bonds generally and into the medium and long term.

    (3) (This part is somewhat in jest.) It means that the investment community believes that Mexico will have won the war on organized crime within 100 years. (In other words, it says nothing about confidence in Mexico's ability to tame violence in the short or medium term. But it *does* say that investors don't see Mexico as a failed state! or even as a state in danger of failure. I agree with investors.)

    Genevieve Signoret

    ReplyDelete
  2. Genevieve SignoretOctober 20, 2010 at 11:43 AM

    (Same comment as below, corrected.)

    Black Swan,

    Clients, audience members at a speaking engagements in Ciudad Juárez, and members of the press have been asking my take on this bond issue. My answer is three-part:

    (1) It's a sign that emerging market spreads are tightly compressed, product of the ongoing search for yield.

    (2) It reinforces Mexico's already strong reputation as possessing at Hacienda brilliant sovereign debt managers. Which in turn supports Mexican sovereign bonds generally and into the medium and long term.

    (3) It means that the investment community believes that Mexico will have won the war on organized crime within 100 years. In other words, it says nothing about confidence in Mexico's ability to tame violence in the short or medium term. But it *does* say that investors don't see Mexico as a failed state! or even as a state in danger of failure. I agree with investors but I also believe that this is something that investors and, especially, Mexicans and their leaders, need to watch.

    Genevieve Signoret

    ReplyDelete

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