2000-03-07 Moody Mexico upgrade

Daily Brady Bond Trading Commentary

Tuesday March 7, 2000 

Moody's did not disappoint the market, upgrading both Mexican long-term and short-term foreign debt one notch to Baa3.

Although Mexico obviously is not the first EM country to attain an investment grade rating, the event is extremely significant for the entire asset class. The country will lose the benchmark status that it holds among the speculative grade Latin credits, and there is some question as to which sovereign will replace it.

We believe we will see US$ Mexican debt out to 10-years trade back inside of 200 bps over Treasuries in the near future, while the longer dated sovereigns trade at such high dollar prices that they may continue to offer a yield premium.

Though South Korea does not benefit from the proximity to the U.S., it can be useful as a comparison to Mexico. The country is rated two notches into investment grade by both Moody's and S&P, and the benchmark 2008 issue trades 165-170 bps wide of Treasuries.

Contributed by

Credit Lyonnais Securities (USA) Inc.


This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.