Mexico has sold over $65 billion pesos of bonds this year luring foreign investors away from other bond markets like the U.S.,Europe and China. As investors are seriously contemplating a double dip recession,they are questioning which bond markets are yielding higher returns and won’t risk default. Mexico is becoming a clear favorite.
Bond investors believe Mexican peso bonds will bring high yields and provide a safe haven,even if the U.S. or economies fall back into recession. In fact,according to J.P. Morgan,investors' demand to acquire Mexican Bonds over U.S. Treasuries has risen 3 points so far this year alone,driving bond yields to the lowest level since the Mexican security was created in 2005.
For the first time in history Mexico’s bond market is being tapped to be included in Citi’s World Government Bond Index which may spur $12 billion more in investment in-flows. Mexico would be the first Latin American country to be included in the index.
Not surprisingly,Mexico’s economy is surging out of the recession at a record 4.5% growth rate (faster than U.S.). It has the lowest business tax index in the world,is currently experiencing double-digit growth in the bank lending segment and has one of the fastest growing real estate markets in the Americas and worldwide.