International Business : Markets in Mexico Soar on Bond News
The Mexican economy got a double shot in the arm Wednesday, and financial markets responded with one of their most electric days in months.
The government announced that it had bumped up a planned $500-million debt issue on international markets to $1.5 billion because of strong demand, and a group of 38 leading companies said they would boost investment next year by 40% to $6.2 billion.
The Mexican stock market, buoyed by the news of the debt issue and lower primary interest rates announced Tuesday, jumped 109.04 points to close at 2,724.5, the highest since October, 1994.
The Mexican peso rose against the dollar, closing 15.25 centavos stronger in widely watched 48-hour contracts at 7.475 per dollar.
“The market is going crazy, the foreigners are the ones that appear most bullish,” a trader said.
The one-year government bonds, to be issued in the coming days, would pay upon maturity either the 12-month London Interbank Offered Rate or the 28-day Mexican Treasury bill rate minus six percentage points, whichever was more attractive, the finance ministry said.
The Mexican Council of Businessmen, announcing stepped-up investment plans by its members, said it strongly backed President Ernesto Zedillo’s handling of Mexico’s economic crisis.