10yr MBono Syndicated Debt Issuance January 25 th, 2011 1
Introduction During the last year the Mexican Government successfully executed several syndicated transactions to issue new benchmark bonds in the local markets. During the first quarter of 2011, the Federal Government will issue the new 10-year MBono benchmark, using the syndicated method. The syndicated issuance method represents an additional step in the development of the local market and has the following advantages: New benchmark bonds reach an adequate outstanding amount from the time that the security is first issued Benchmark bonds become eligible for inclusion in global fixed income indices A broad distribution among a wide investor base ensures liquidity of the new benchmark in the secondary market 2
Accumulated Amount (Million pesos) Accumulated Amount (Million udis) Syndicated Debt Issuance Introduction The syndicate issuance method has proven to be an effective tool to improve liquidity of new benchmark bonds in the secondary market and to increase the outstanding amount in a short period of time. 10-yr Mbono Benchmark 30-yr Udibono Benchmark 35,000 30,000 25,000 Weekly Auctions (M 181213) Syndicated Bond (M 200611) 4,500 4,000 3,500 3,000 Weekly Auctions (S 351122) Syndicated Bond (S 401115) 20,000 2,500 15,000 2,000 10,000 5,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 # Auctions 0 1 2 3 4 5 6 7 8 # Auctions Source: Ministry of Finance 3
Managers For the syndicated issuance of the new 10-year benchmark, the Federal Government has appointed the following institutions as Lead Managers and Co- Managers. All of these institutions actively participate in the Market Makers Program for local government securities. Lead Managers: Banco Santander (México), S.A., Grupo Financiero Santander. BBVA Bancomer S.A., Grupo Financiero BBVA Bancomer HSBC, México, S.A., Grupo Financiero HSBC. Banco Nacional de México, S.A., Grupo Financiero Banamex. Co- Managers: Deutsche Bank México, S.A., Institución de Banca Múltiple ING Bank (México), S.A., ING Baring Grupo Financiero (México). Bank of America México S.A. Institución de Banca Múltiple Grupo Financiero Bank of America. Banco JP Morgan, S.A., JP Morgan Grupo Financiero. 4
New Benchmark In this transaction, the Federal Government will issue a new 10-year nominal fixed rate bond benchmark. Once this process has finished, the bond will be reopened on a regular basis at the primary auctions starting Q2 2011. Security Description United Mexican States Security Type: Nominal Fixed Rate Federal Government Bond Financial Agent: Banco de Mexico Security Series: M 210610 Coupon rate: 6.50% Coupon frequency: Semi-annually (June/December) Coupon basis: Act/360 Maturity Date: June 10th, 2021 Face Value 100 MXN 5
Timeline The syndicated issuance will be carried out according to the following schedule: Date United Mexican States January 25 th, 2010 Conference call with investors After January 25 th, 2010 Pre - Book Building T-1 Transaction Announcement T-1 to T Book Building T Pricing and Announcement of Results T+2 Settlement T is a date to be announced 6
Execution Process Jan 25 th After Jan 25 th T-1 1 Conference Call 2 Pre-Book Building with Investors 3 Transaction Announcement T-1 to T T T+2 4 Book-Building Pricing and 5 Announcement of 6 Settlement Results T T is a date to be announced 7
Final Remarks The Debt Management Strategy for 2011 contemplates the syndicated issuance process for the new domestic benchmark bonds The issuance of new benchmarks through the syndicated process carried out during the 2010 proved to be an effective mechanism to place an adequate amount of bonds in a single transaction The larger initial amounts issued of new benchmarks will lead to an improvement in liquidity conditions in the secondary market It will also allow for the new benchmarks to be incorporated automatically in the main global fixed income indices, of which Mexico is already a member The introduction of the syndication process is an element that contributes further with the development of local debt markets in Mexico 8
Final Remarks The Ministry of Finance and Public Credit offers the following dial in numbers for the conference call: Toll from the United States/Canada (866) 739 0461 Toll from Mexico 00 186 6403 7413 For the rest of the world (706) 634 7285 Access code 39110447 This presentation is also available at the Ministry of Finance s web page at: http://www.hacienda.gob.mx/ 9