2000-02-03 Moody Mexican debt review

Daily Brady Bond Trading Commentary

Wednesday February 3, 2000 

Moody's announced that it is placing Mexico's foreign currency debt ratings on review for possible upgrade, sending prices markedly higher.

Mexico's Ba1 rating is only one notch below investment grade and one notch above S&P's rating on the country. Investment grade status would open Mexican debt up to a much wider investor base, and would also provide a significant boost to sentiment regarding the entire emerging market asset class.

Moody's is expected to make a firm decision on the rating within 90 days, well before Mexico's Presidential elections take place. The market had been expecting the agencies to wait to observe the political process in the country this summer before considering raising ratings.

Odd spread movements in Brady Bonds this week have been directly attributable to wild gyrations in the U.S. Treasury curve. Friday's employment report should make things even more interesting. We look for a possible rally in Latin debt next week as the market will have time to focus on local fundamentals.

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.