The Administration of President Enrique Peña Nieto has stressed its commitment to consolidate macroeconomic stability, to maintain healthy public finances and to use public debt responsibly. In this regard, and in order to maintain and strengthen communication and transparency of public debt management, the Ministry of Finance and Public Credit (SHCP) announces the government securities auction calendar for the fourth quarter of 2016.

This schedule is consistent with the Economic Program approved by Congress for the 2016 fiscal year and with the 2016 Annual Borrowing Plan. The government securities auction programs for 2016 contemplates a 0.5% reduction in the budget deficit during 2016, hence a reduction in the Federal Government net indebtness.

Important Aspects

The most important aspects of the government’s securities issuance program for the fourth quarter of 2016 are the following:

  • The amounts to be auctioned for Fixed Rate Bonds (Bonos M), Inflation Linked Bonds (Udibonos) and Floating Rate Bonds (Bondes D) will remain unchanged compared to the announcement made on April 29th, 2016.
  • The amount to be issued for 1-year Treasury Bills (Cetes) will be reduced by 1,000 million pesos.
  • The Federal Government will continue with the mechanism to announce a minimum and a maximum amount of 28-day and 91-day Cetes to be issued weekly. The specific amount to be issued each week of 28 and 91-day Cetes will be specified in the corresponding auction announcement of the Central Bank.
  • During the fourth quarter of 2016, the ranges for 28 and 91-day Cetes will remain unchanged. The 28-day Cetes weekly minimum and maximum issuance amount will be 4,000 and 11,000 million pesos respectively, and in the first week of the quarter, 5,500 million pesos will be auctioned. The 91-day Cetes weekly minimum and maximum issuance amount will be 7,000 and 14,000 million pesos and in the first week of the quarter, 9,500 million pesos will be auctioned.
  • As in previous quarters, syndicated auctions may be carried out using a flexible format. This format allows the Federal Government to choose the right timing for each transaction based on investors’ appetite and market conditions. These auctions are not part of the amounts announced for the quarterly calendars nor as substitutes of primary auctions. Once the new references are issued, the reopening policy will continue.
  • The auctions of stripped 30 year Udibonos will continue to take place every 12 weeks. The amount to be auctioned will be announced the week prior to the transaction.

The auctions of Treasury Bills (Cetes), Fixed Rate Bonds (Bonos M), Udibonos (Inflation Linked Bonds) and Floating Rate Bonds (Bondes D) and the auctions of stripped Udibonos to be executed during the fourth quarter will have the following characteristics.

Exchange and Repurchase Transactions

The Ministry of Finance may execute exchange and repurchase transactions of government securities during the fourth quarter of 2016. These transactions may include any issuance outstanding.

In case one of these transactions is executed, the Ministry will specify, through the Central Bank, the instruments, terms and sizes of each transaction.

Progress in the government’s issuance reduction program

On April 11th, 2016, the Federal Government announced that 167 billion pesos, equivalent to 70 percent of the operating surplus of the Central Bank, would be used to reduce both the Federal Government’s outstanding debt and debt issuance during 2016. In this regard, on May 4th the Ministry of Finance repurchased 97.9 billion pesos of fixed rate and inflation linked bonds.

In addition, the Ministry of Finance adjusted its securities auction calendar for both the remaining months of the second quarter and the entire third quarter. With this, the Ministry of Finance reduced its domestic debt issuance by at least 42.375 billion pesos in this period. For the fourth quarter, debt issuance will be reduced by at least 27.250 billion pesos compared to the original program. Thus, the reduction in the domestic debt issuance will reach at least 69.625 billion pesos by the end of 2016. This reduction along with the 97.9 billion pesos repurchase transaction will represent an adjustment in Federal Government’s debt by the end of 2016, of at least 167.525 billion pesos, compared to the outstanding debt that would have been observed in the absence of the Central Bank’s operating surplus.