(Bloomberg) -- Mexico priced Samurai bonds on Thursday, showing that there’s investor demand in Japan for riskier debt, particularly for shorter-dated tenors.
The sovereign issuer sold ¥152.2 billion ($1.05 billion) of notes in five tranches, with the three-year part of the deal accounting for almost two thirds of the total size, according to Daiwa Securities Co., one of the underwriters.
Spreads on yen credit have inched higher in recent weeks, as market volatility climbed amid uncertainty about whether the Bank of Japan will raise interest rates again after doing so twice this year. The Mexican government paid a spread of 95 basis points on the three-year note. By comparison, Indonesia, which has similar BBB level debt ratings as Mexico, paid a yield premium of 50 basis points when it undertook a Samurai bond deal in May.
Mexico has been keen to diversify its overseas debt sources, and it’s sold yen bonds roughly every two years—the previous issuance was in 2022. It plans to use the funds it raises on projects tied to United Nations Sustainable Development Goals.
Buyers included city banks, life insurers, asset management firms as well as domestic and foreign corporations, according to details provided by Daiwa.
(Adds table comparing spreads for Mexico and Indonesia and a comment from an underwriter)
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