Overview of Mexico’s Recent Debt Actions
Mexico recently issued two new reference bonds and refinanced debt to decrease its foreign currency obligations, according to information released by the Secretariat of Finance and Public Credit (SHCP).
Details of the Debt Issuance
- Two new reference bonds were issued, totaling $3.95 billion and $2.85 billion, with maturities in 2032 and 2038, respectively.
- The 2032 bond carries a coupon rate of 5.85%, while the 2038 bond offers 6.625%.
- These issuances resulted in a benefit of 15 and 25 basis points, respectively, below the levels seen in January 2025’s transaction.
- The interest rate spread between the announced price and closing price was 16% and 13%, respectively.
These favorable conditions allowed for a “deleveraging” benefit of $207 billion, according to Hacienda.
Additional Debt Actions
- Mexico captured resources to conduct an early buyback of a bond maturing in 2026.
- A refinancing operation of $2.5 billion was carried out by exchanging bonds maturing between 2027 and 2031.
This refinancing operation successfully reduced the external debt by 15% for obligations in dollars with maturities between 2027 and 2031.
Mexico’s Debt Landscape
As of April, the Historic Balance of Public Sector Financial Requirements (SHRFSP) reported a total debt level of 17.527 trillion pesos.
- 74% of this amount represents internal debt, while 26% corresponds to foreign debt, totaling 4.526 trillion pesos.
During her first year in office, Claudia Sheinbaum requested a domestic debt ceiling of 1.5 trillion pesos from Congress, significantly lower than Andrés Manuel López Obrador’s request in his final year. This led to a fiscal deficit closing at a historical 5.7% of the GDP in 2024.
On the external debt front, the government sought up to $15.5 billion from Congress.
SHCP’s Commitment to Responsible Debt Management
The SHCP reaffirmed its commitment to using public debt responsibly, adhering to the Annual Financing Plan 2025 and maintaining a prudent fiscal policy with a sustainable debt trajectory in line with approved debt ceilings.
Key Questions and Answers
- What actions did Mexico take regarding its debt?
Mexico issued two new reference bonds totaling $6.8 billion, with maturities in 2032 and 2038. Additionally, the country refinanced $2.5 billion of debt to lower its foreign currency obligations.
- What were the coupon rates of the newly issued bonds?
The 2032 bond carries a coupon rate of 5.85%, while the 2038 bond offers 6.625%.
- How much did Mexico’s debt decrease by?
Through the refinancing operation, Mexico reduced its external debt by 15% for obligations in dollars with maturities between 2027 and 2031.
- What is the current debt situation in Mexico?
As of April, Mexico’s total debt stood at 17.527 trillion pesos, with 74% being internal debt and 26% foreign debt totaling 4.526 trillion pesos.
- What debt ceiling requests were made by the current and previous administrations?
Claudia Sheinbaum requested a domestic debt ceiling of 1.5 trillion pesos, while Andrés Manuel López Obrador sought up to $15.5 billion for external debt from Congress.
