Bloomberg News

Mexican Peso Bonds Advance on U.S. Economic Growth Outlook

December 15, 2011

Dec. 15 (Bloomberg) -- Mexico benchmark peso bonds rose for the first time this week after U.S. unemployment claims fell to a three-year low, boosting the outlook for economic growth.

The yield on Mexico’s benchmark peso-denominated bond due in 2024 fell three basis points, or 0.03 percentage point, to 6.78 percent in Mexico City, according to data compiled by Bloomberg. The price of the security climbed 0.25 centavo to 127.77 centavos per peso. The peso declined 0.2 percent to 13.9153 per U.S. dollar, from 13.8923 yesterday.

The number of applications for unemployment benefits in the U.S. unexpectedly dropped last week to the lowest level in three years, Labor Department figures showed today in Washington. Gauges of manufacturing in the New York and Philadelphia regions also topped estimates. Mexico sends about 80 percent of its exports to the U.S.

“A lot of people still are enthused about the data that’s been coming out of the U.S.,” Alex Silva, who oversees $800 million of assets at Silva Capital Management in Chicago, said in a telephone interview. The bonds are “just a levered beta- play on the U.S. growth story. We’re actually dealing more in the true fundamentals of a country that’s still exhibiting growth and it’s linked to one of the parts of the world that’s still holding in,” he said.

The central bank said it didn’t sell dollars or receive offers in the three auctions it held today.

Mexico’s currency-exchange commission said Nov. 29 the central bank will auction $400 million of its reserves daily at a peso exchange rate at least 2 percent weaker than the previous day’s level to arrest a slide in the currency. The currency has dropped 11.3 percent this year, the biggest decline among the region’s major currencies.

--With assistance from Shobhana Chandra and Timothy R. Homan in Washington. Editor: Lester Pimentel

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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