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By Stefanie Eschenbacher and Dave Graham
ACAPULCO, Mexico, March 21 (Reuters) – Mexico aims to reduce the percentage of its sovereign debt portfolio issued in foreign currencies, but will consider continuing to place bonds denominated in yen, euros and U.S. dollars, a finance ministry official said on Thursday.
“The question is how much we can lower it,” Gabriel Yorio, the head of the finance ministry’s public debt office, said in an interview with Reuters on the sidelines of a banking convention in Acapulco.
Yorio said around 23 percent of Mexico’s sovereign debt was in issuance denominated in foreign currencies, and that for now, the government was looking to bring it down towards 20 percent. After that it would review matters again, he said.
“Once we’ve done more of a medium-term analysis, we’d define whether our objective is to reduce it beyond 20 (percent),” he said. “But what we definitely don’t want to do is go above 23.”
Mexican President Andres Manuel Lopez Obrador, a veteran leftist, took office in December. Markets are paying close attention to his ability to look after the finances of Latin America’s second-biggest economy.
He has vowed to run a tight budget, though the struggles of debt-laden state oil company Pemex have led to warnings from rating agencies that Mexico’s creditworthiness could be downgraded without careful stewardship of public finances.
Yorio, a former World Bank official who managed Mexico City’s debt during part of Lopez Obrador’s 2000-2005 mayoralty of the capital, noted that Mexico had redemptions coming up in bonds denominated in euros, dollars and yen.
“What we’re obviously trying to identify is the best way of approaching those markets in this fiscal year,” Yorio said.
The government was considering its options, which included a complete roll-over of such debt, a partial one, or issuing bonds in another currency to cover the borrowing need, he said.
Mexico, which is due to publish its latest regular quarterly debt issuance calendar next week, has in recent years also sold debt with ultra-long, 100-year maturities. Yorio said that was another option that was under consideration.
“We still think it’s a bit expensive,” he said. “But demand seems to be brewing, particularly in the European market, for 100 year (debt).” (Reporting by Stefanie Eschenbacher and Dave Graham; editing by Frank Jack Daniel and Rosalba O’Brien)
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