Mexico Airport bonds jump as EM debt moves mostly lower as equities tumble

By Rebecca Melvin

New York, Dec. 4 – Mexico City Airport bonds jumped on Tuesday when much of the emerging markets debt space was moving lower amid a plunge in equities and bid in U.S. Treasuries.

The sharp move lower in equities, which saw the Dow Jones industrial average slide almost 800 points, or 3% on the day, was generally believed to be related to fears of slowing global growth and doubts over the U.S.-China trade truce.

Meanwhile, the Treasury yield curve flattened further, with two- and three-year note yields rising above five-year debt to mark an inversion, and the spread between yields on the two- and 10-year Treasuries narrowed to a level last seen in 2007.

Nevertheless, the Mexico City Airport bonds lifted after the Mexican government announced a buyback for up to $1.8 billion of the bonds.

Mexico’s new president, Andres Manuel Lopez Obrador, announced in October that he did not plan to complete the airport for which $6 billion of bonds had already been issued.

Mexico City Airport’s 5½% bonds due 2047 were up at 83.95, a gain of nine points, or 12%, from 74.88 on Monday. Its 3 7/8% notes due 2028 were at 84.12, which was up six points or nearly 8% on the day.

But the bonds of Petroleos Mexicanos SAB de CV were lower with the Pemex 6½% notes due 2027 down about 1.5 points to 94.

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