The most important aspects of the government’s securities issuance strategy for the third quarter of 2014 are the following:
- During the third quarter of 2014, the mechanism adopted since the 2nd quarter of 2013 to determine the amount to be issued of the 28-day and 91-day Cetes will continue to be used. This mechanism consists in announcing each quarter a minimum and a maximum amount to be issued each week. In this way, the weekly issuance amount of these instruments will be between these specific amounts.
- For the third quarter of 2014, the 28-day Cetes weekly minimum and maximum issuance amount will be 4,000 and 9,000 million pesos, respectively. The 91-day Cetes weekly minimum and maximum issuance amount will be 7,000 and 12,000 million pesos, respectively. In the first week of the quarter, 5,500 million pesos of 28-day Cetes and 9,500 million pesos of 91- day Cetes will be auctioned. The amount to be issued each week will be specified in the weekly auction announcement of the Central Bank.
- As previously announced, syndicated auctions are now conducted using a more flexible format. These operations will no longer be announced as part of the quarterly calendars nor as substitutes of primary auctions.
- Hence, these auctions could be performed in any quarter of the year and the amount to be auctioned may be in addition to the quarterly issuance scheduled for that instrument. The announcement of the syndicated auction will be held in the week prior to its issuance.
- This format allows the Federal Government to choose the right timing for each transaction based on investors’ appetite and market conditions.
- The syndicated auctions of stripped 30-year Udibonos will continue to take place every twelve weeks. The amount to be auctioned will be announced the week prior to the transaction.
- Please note that starting on the third quarter of 2014, the Udibono due Dec-17 (S171214) will replace the (S160616) as the new 3-year inflation-linked bond benchmark, the Mbono (M180614) will replace the (M171214) as the new 3-year benchmark and the Mbono (M181213) will replace the (M180614) as the new 5-year benchmark. This strategy was designed to increase liquidity in previously issued bonds.
- The auctions of Cetes, Nominal Fixed-Rate Bonds, Udibonos, Bondes D and the syndicated auctions of stripped Udibonos to be executed in the third quarter will have the following characteristics.
The Ministry of Finance may execute exchange and repurchase transactions during the third quarter of 2014. These transactions may involve the different securities that are issued. The exchange transactions run by the Ministry may be executed periodically and will take place as long as the market conditions are conducive to their successful execution. In case one of these transactions is executed, the Ministry will specify, through the Central Bank, the instruments and the amounts involved.