In keeping with what has almost become a tradition, coinciding with the start of the new year, Mexico kicked off its international bond offerings with a US$7.5 billion sovereign debt placement, a historic record for the country. Mexico has kicked off the international sovereign bond market for ten consecutive years.

This bond issue, consisting of 5-, 12-, and 30-year bonds, comes at a time when the Mexican government has approved a sharp increase in the budget and the debt ceiling, coinciding with the final year of President Andrés Manuel López Obrador’s administration. This marks a departure from the austere fiscal policy the government has followed until now. 

The increase in spending planned for this year, including a 25% rise in the cash assistance provided every two months to 6,000 elderly people, ihad a negative impact on market sentiment, which was reflected in a two-cent-per-dollar drop in the price of bonds maturing in 2053 following the announcement. But it was a one-off reaction. As several analysts point out, Mexico’s public debt is relatively low, equivalent to about 47% of GDP. 

In this regard, the recent bond issuance drew demand of more than US$21,000 million. According to the Ministry of Finance, thethe issuance succeeded in reducing financing costs and ensures 100% coverage of external debt maturities in 2024.