Mexico’s benchmark local bonds are poised for the biggest annual rally in four years after underperforming regional debt in 2009 as the economy recovers and the peso gains, Stone Harbor Investment Partners said.
The yield on Mexico’s 10 percent peso bond due in December 2024 may plunge about 40 basis points, or 0.40 percentage point, in 2010, to 7.80 percent, said Pablo Cisilino, who manages $11.5 billion in emerging-market assets at Stone Harbor in New York. That would be the biggest one-year drop since 2006.
Mexican domestic debt returned 7.7 percent last year, less than the 10 percent return posted by Latin American local bonds on average, according to JPMorgan Chase & Co.’s ELMI+ index. The region’s second-largest economy will grow 2.95 percent in 2010 after contracting 7 percent last year, the most since 1932, the median forecast of 19 economists in a Bloomberg survey shows.
“People were too pessimistic on the growth outlook for Mexico and very pessimistic about the peso,” Cisilino said. “Things are changing. They’re starting to come around.” - http://www.bloomberg.com/apps/news?pid=20601086&sid=a6oOsxViKQ04
