| | |  Business News | October 2008 
Mexico's Benchmark Peso Bonds Post Record Gain; Currency Rises
 Valerie Rota - Bloomberg
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Mexico's benchmark peso-denominated bonds rose by the most ever as yields at the highest in 3 1/2 years helped to ease investor aversion to higher-yielding assets.
Yields on government bonds maturing in 2024 fell for the first time in 10 days. The decline pares a 2 percentage point surge last week, the biggest ever, when the peso weakened to a record low on concern the deepening financial turmoil would push the global economy into a recession.
"What happened last week was truly irrational," said Salvador Orozco, head of fixed-income strategy at Banco Santander SA in Mexico City. "Yields are still high but they are adjusting in an illiquid market."
The yield on the 10 percent peso bond due in December 2024, Mexico's most-traded security, fell 88 basis points, or 0.88 percentage point, to 10.52 percent at 12:07 p.m. New York time. The bond's price climbed 6.27 centavos to 95.96 centavos per peso, according to Santander.
The yield gap between Mexico's 10-year security and comparable-maturity U.S. Treasuries narrowed to 6.83 percentage points today from 7.65 percentage points on Oct. 24, when it swelled to its widest ever.
"The spread levels that we've reached now seem like they've become attractive," said Eduardo Perez, who oversees about $5 billion in assets in Mexico City at Grupo Nacional Provincial SA.
'Had Feared'
The peso rose 0.75 percent to 13.285 per dollar, compared with 13.3842 on Oct. 24. Mexico's currency rose for a third straight day, its longest winning streak in two months, and has appreciated 7.5 percent since touching a record low of 14.3017 on Oct. 23.
Smaller declines in U.S. stocks than suggested by futures trading before the open of U.S. exchanges helped support gains in the peso, said Omer Esiner, a senior market foreign-exchange analyst in Washington at Ruesch International Inc., a currency trading company.
"We're seeing a slight reduction in risk aversion," Esiner said. "Wall Street opened in negative territory but not as bad as some had feared."
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1(at)bloomberg.net. |
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