Market Signals Weekly Review
July 15, 2019
INVESTMENT IDEAS
Today we will look at two corporate debt securities as investment ideas for this week: Petroleos Mexicanos and Credit Bank of Moscow
Idea #1: Petroleos Mexicanos
Against the background of the “pigeon” signals from the ECB, the rates in euro are also dynamically falling. For example, the yield of the Russian sovereign Eurobond with redemption in September 2020 steadily fell into the area of negative values. Note that among the securities with an “investment” rating, the Eurobonds curve of Petroleos Mexicanos, whose ten-year issues offer a yield above 5%, looks very interesting.
Founded in 1938, Petroleos Mexicanos is a non-public government company producing oil and gas in Mexico. Petroleos Mexicanos exports both petroleum and main petrochemical products. Pay one third of all taxes collected by the Mexican government. The company employs 128 thousand people.
The senior issue in the amount of 1.25 billion euros maturing in February 2029 was placed in May last year. The minimum lot for the release is 100 thousand euros.
Idea #2: Credit Bank of Moscow
In just one month, the curve of senior issues of the Credit Bank of Moscow shifted in terms of profitability by 1 pp down, responding to the overall growth of the market and investors’ search for high-yield Eurobonds. At the same time, all papers rose in price, and the premiums in the yield of Credit Bank of Moscow issues to their international peers remain extended. The farthest senior issue of the issuer (with maturity in 2024) now offers a return of just above 6%, which looks, in our opinion, interesting.
Alexey Shternshis
Joint Managing Director
Capital Pi
