Mexico prepares return to yen-denominated samurai bond market with up to six tranches

Mexico plans to price its first samurai bond issue since 2024 this week, Bloomberg Línea reported. The country is seeking to sell yen-denominated notes split into up to six tranches, with maturities ranging from 3.5 to 20 years.

Samurai bonds are yen-denominated debt issues sold by foreign borrowers in the Japanese market. For a sovereign, this route diversifies its investor base beyond the traditional dollar or euro markets, although it shifts currency exposure to the Japanese yen and depends on the liquidity of the Japanese market.

The deal comes amid pressure on Mexico's public finances. According to Bloomberg Línea, the rating agency Moody's Ratings recently downgraded the country to the lowest rung of investment grade, citing ongoing support for state oil company Petróleos Mexicanos as limiting the government's ability to contain borrowing.

In its most recent similar placement, in August 2024, the country issued 152.2 billion yen (equivalent to $1.05 billion) across five tranches. Initial negotiations for the new placement contemplate pricing between 100 and 200 basis points over TONAR mid-swaps.