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Zapopan mimics Monterrey in Mexico muni market

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The Mexican city of Zapopan priced a Ps147 million (US $14.7 million) bond at a floating 90 basis points over 182-day Cetes, the government’s benchmark Treasurys. The yield jibed with official price talk and matched results for a Ps168 million (US$16.8 million) bond that municipal cohort Monterrey issued the week before (See ASR 9/9, p 26).

Acciones y Valore de Mexico (Accival) handled both deals. “We did heavy marketing with (Zapapon’s) placement,” said Rodrigo Barrera, a senior associate at Accival. That helped generate a bid-to-offer of around 1.5x. Wealthy individuals bought about 93% of the deal and pension funds took the rest.

Zapopan’s bond is backed by federal participation revenues, which won it a triple-A’ national-scale rating from Moody Investor Service and Standard & Poor’s. The deal marks the fifth domestic muni bond in Mexico. All have been structured. “It’s the only way that municipalities can reach triple-A,’” Barrera said, adding that many subnationals would struggle to find investors even if they secured federal revenue-backing for a deal.

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