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Mexico Sells 100-Year Bond In Euros In First Offer By Government

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Mexico sold the world’s first 100-year government notes in euros and its third so-called century bond as the nation seeks to lock in lower borrowing costs amid the European Central Bank’s unprecedented stimulus.

The country offered 1.5 billion euros ($1.62 billion) of debt due in March 2115 with a 4.2 percent yield to maturity, according to a statement from the Finance Ministry. Yields on Mexico’s 30-year euro bonds sold in February have fallen 0.32 percentage points since the debt started trading to 2.77 percent as of 3:22 p.m. in New York.

Countries and companies from Bulgaria to China are taking advantage of falling borrowing costs in Europe, issuing 20 billion euros ($21.7 billion) in the first three months of this year to cap the second-busiest quarter for emerging-market bond sales in a decade as the ECB started a 1.1 trillion-euro bond-buying program. Mexico’s offering in euros follows its sale of 1 billion pounds ($1.49 billion) of 100-year debt last year and has sold $2.68 billion of century bonds since 2010.

“It’s a good opportunity to lock in ultra-long-term financing at rates well below where they issued in dollars and pounds,” Richard Segal, the head of emerging-market credit strategy at Jefferies International in London. Mexico’s 100-year bond in pounds was sold to yield 5.75 percent, while the dollar securities were issued at 6.1 percent.

And if the Euro fails to exist what will the bone holders get in return???

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Until Wednesday, no country had ever sold 10-year debt that gives investors a yield of below 0%. And no country had ever issued a 100-year bond denominated in euros.

But in the latest stark sign of how easy the era of easy money has become, Switzerland on Wednesday sold 10-year bonds that investors are actually paying to hold, while Mexico lined up a rare transaction to borrow euros it promised to repay a century from now—at a yield of 4.2%.

The WSJ take on it!

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It probably doesn't matter what a lot of the holders get as they'll be bailed out if there's a risk of loss and given access to free money printed up specially.

Some of them are probably being bought up with the recently printed up money at any rate. Free money on top of free money - everyone should be allowed to queue up at that window.

Edited by billybong

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