Call us on
+44 (0) 207 045 0920


CASE STUDY: Nafin’s Yen Bond Cuts a Clear Path to Japan for Mexican Banks

Nacional Financiera SNC (Nafin) became the first Mexican agency to place a Yen bond in 14 years, following in the footsteps of the sovereign to price a JPY10bn 5-year bond at just 68bp over Yen midswaps.

Aug 24, 2017 // 3:59PM


Following a streak of Japanese Yen issuances by the Mexican government backed by JBIC, the sovereign was able to place its first Samurai bond without a guarantee or JBIC’s assistance in 2013, opening the market up for local FIs and corporates.

Nafin then became the first such institution, placing a JPY10bn 5-year bond at a time when markets were overall cautions about Mexico. The state-owned lender’s trade helped establish an alternative pool of liquidity in hard currency, allowing it to price at just 8bp below the latest UMS benchmark.

Transaction Breakdown

For a number of years, Nafin made it a key policy point to travel across the world to Japan to participate in “reverse roadshows” with local accounts, discussing the organization’s plans and outlook in order to woo potential investors. In March 2017, Mr. Pedro Guerra, Nafin’s CFO, conducted a 3-day non-deal roadshow in Japan, meeting with core Japanese investors, and then went on to take advantage of the momentum created by the visit to place its inaugural Yen bond.

Books opened on Monday March 20 at 10am in Japan / 8am in Singapore with initial price thoughts of Yen Mid Swaps+65bp-72bp.

The transaction gained momentum after the announcement and benefited from having high quality investors that included Japanese insurance companies, commercial banks, and credit unions.

The high-quality order book allowed Daiwa to narrow price guidance to Yen Mid Swaps+68bp and books were officially closed on Wednesday March 24 at 9:25am in Japan, with pricing taking place shortly thereafter.

The issuer was able to achieve a coupon of 0.78% (equivalent to Yen Mid Swaps+68bp) representing only 8bp behind UMS’ latest 5-year Samurai bond issued in June 2016, showing confidence from Asian investors that Mexico is a dynamic global economy that is not entirely reliant on the US.

About 60% of the notes were placed with Japanese insurance companies; another 19% went to banks and the remaining 21% went to credit unions and other types of investors. Investors who swapped back into dollars after purchasing the notes complimented the competitive rate on the swaps.

It was the first yen transaction from a Mexican Agency in almost 14 years, tapping into strong demand precipitating from Nafin’s previous issuances, including its recent green bond, allowing Nafin to further bolster its credit profile.

Americas Mexico Latin America

Bonds & Loans is a trusted provider of news, analysis, and commentary that helps illuminate the most significant issues, events and trends impacting the global emerging credit markets.

Recommended Stories