Yields on Mexican peso-denominated bonds rose to a seven-week high as concern that Greece’s debt writedown may be rejected by many private creditors this week eroded demand for emerging-market securities.
The yield on the debt due in 2024 rose two basis points, or 0.02 percentage point, to 6.57 percent at 8:38 a.m. in Mexico City, according to data compiled by Bloomberg. A close at that level would be the highest since Jan. 11. The price of the securities fell 0.20 centavo to 129.59 centavos per peso.
The success of the 106 billion-euro ($140 billion) debt swap, confirmed on the eve of last week’s European Union summit, depends on how many investors agree to the writedown by the March 8 deadline. Mexico’s local bonds rallied at the beginning of this year as investors boosted holdings of the country’s fixed-income assets in part on speculation that European leaders would resolve the region’s sovereign debt crisis.
“It has to do still with this European problem and the Greek exchange and the uncertainty that still exists around that,” Alejandro Urbina, who oversees $800 million of assets at Silva Capital Management, said by phone from Wilmette, Illinois.
Mexico plans to sell dollar-denominated bonds due 2044 in a benchmark offering as soon as today, according to a person familiar with the transaction.
The peso fell 0.5 percent to 12.8239 per U.S. dollar, from 12.7599 on March 2. The currency has gained 8.7 percent this year.
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