UPDATE 2-Mexico to raise its Q1 2014 debt issuance level

Thu Dec 19, 2013 5:50pm EST

MEXICO CITY Dec 19 (Reuters) - Mexico will boost the amount of debt it will issue in the first quarter of 2014, the finance ministry said on Thursday, as the government seeks to spend more to strengthen a nascent economic recovery in Latin America's No. 2 economy.

The government will sell 1 billion pesos ($77.15 million) more each week in six-month peso-denominated bills, for a total of 11.5 billion pesos of the paper weekly, the ministry said. Offers of three-month and one-year debt will also increase.

Mexico's offering of three-year and five-year bonds will increase by 1 billion pesos each to 11 billion and 10.5 billion pesos, respectively, every four weeks.

Offers of 10-year bonds every six weeks will increase by 500 million pesos to 8.5 billion pesos, while offers of 20- and 30-year bonds will remain at 4 billion and 3.5 billion pesos, respectively, every six weeks.

The government plans to run a budget deficit of 1.5 percent of gross domestic product (GDP) next year, excluding debt from state-run energy firms, up from a 0.4 percent deficit this year, as it boosts spending in a bid to shore up a tepid recovery.

Mexican growth contracted in the second quarter for the first time in four years but rebounded in the third quarter.

The finance ministry expects growth of just 1.3 percent this year, well below the 3.8 percent recorded in 2012.

On Thursday, the Finance Ministry also said it was planning two syndicated auctions of fixed rate five-year and 20-year bonds.

Starting in 2014, syndicated auctions can occur in any quarter and the amount auctioned may be above the scheduled amount, the ministry added.

The ministry said it was also considering issuing euro- and yen-denominated debt next year, something it has done this year.

President Enrique Peña Nieto has been pushing through Congress a raft of reforms aimed at jump-starting growth in Mexico, whose economy has long lagged those of emerging market peers.

The cornerstone of the reform drive, a shake-up of the energy sector, is due to be signed into law any day now.

The central bank has said it expects growth to reach 3 to 4 percent next year, helped by the reforms.

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