MEXICO CITY Nov 30 Nomura analysts said on
Wednesday that a sell-off of Mexican peso-denominated bonds
could gain pace and that potential U.S anti-trade policies could
drive yields back near levels seen during the global financial
In a client note, Nomura said that data showed foreign funds
had been selling Mexican peso bonds since the surprise Nov. 8
election of Donald Trump as U.S. president.
The United States is Mexico's top trading partner; Trump
threatened to curtail trade with Mexico during the campaign.
So far, local pension funds appear to be picking up
longer-dated Mexican peso debt, Nomura said. But since
foreigners hold about four times more peso bonds than local
pension funds, local buyers may not be able to keep up purchases
"The risk of a sharp sell-off in the long end of the curve
remains latent in the case that compensating local purchases
reach its limits," Nomura analysts Mario Robles and David Wagner
The yield on Mexico's benchmark 10-year bond has
surged more than 100 basis points since the U.S. election, and
the spread between the bond and its U.S. equivalent has widened
to around 490 basis points.
Nomura said new U.S. trade policies could end up changing
the outlook on Mexico's exchange rate and growth prospects. Such
developments, as well as other global risks, like unpredictable
euro zone elections, could spur more selling of Mexican bonds.
Nomura said the U.S.-Mexico 10-year spread could blow out
toward the 785 basis points seen during the 2008-2009 global
"The uncertainty on the final shape of U.S. policy could
still put a strain on this spread, maybe to levels not as high
as the global financial crisis period, but nevertheless, at
higher levels than currently," analysts said.
(Reporting by Michael O'Boyle; Editing by Jonathan Oatis)