Surprising Mexican auction

Publication date: November, 26, 2022 | Tags: Amounts, Financial, Maturity

Special Investigation

By Alberto González Karam

• They present an oversupply of 112 thousand 391.77 million pesos by national and foreign stock market investors that exceeded 87 thousand 391.77 million pesos amounts placed
• They are equivalent to an average of 4.49567 times the amounts placed in government securities, demonstrating confidence in the federal public administration until September 2027.

The Ministry of Finance and Public Credit (SHCP) through the Bank of Mexico (BANXICO) as financial agent, proceeded to place 25 billion pesos in government securities denominated in Federal Treasury Certificates (CETES) and Bonds de Desarrollo (BONDES), resulting in an oversupply of 112 thousand 391.77 million pesos by national and foreign stock market investors that exceeded 87 thousand 391.77 million pesos, equivalent to an average of 4.49567 times the amounts placed in swaps and auctions, demonstrating and fully proving the broad confidence in the current federal public administration, whose maximum maturity will take place in September 2027.

It is important to highlight that the national and foreign stock market investors with the greatest oversupply, registered in first place the government securities of the Federal Treasury Certificates (CETES) with 13.48342 times the amount placed at a weighted average rate of 10.05 percent and term valid for 686 days; in second place the Certificates of the Treasury of the Federation (CETES) with 5.51582 times at a weighted rate of return of 10.60 percent and a maturity of 182 days; in third place the Certificates of the Treasury of the Federation (CETES) with 5.24356 times at a weighted rate of return of 10.63 percent and maturity in 364 days; and in fourth place the Development Bonds (BONDES) with 5.06852 times at a weighted average price of 99.92 pesos and maturity in 287 days.

In fifth place, the Development Bonds (BONDES) with 4.14835 times at a weighted average price of 98.98 pesos and maturity in 1778 days; In sixth place, the Federal Treasury Certificates (CETES) with 1.98965 times at a weighted rate of return of 10.63 percent and maturity in 231 days; and in seventh place the Development Bonds (BONDES) with 1.85714 times at a weighted average price of 99.47 pesos and maturity in 1050 days.

The successful auction will allow broad confidence of stock investors in Mexico, as a result of the positive economic, monetary, fiscal, financial and international trade environment currently registered until September 2027.

The placements in the primary market of government securities called Certificates of the Federation Treasury (CETES) by national and foreign bidders who offered maximum amounts of 112 thousand 391.77 million pesos and obtained an allocation of 25 billion pesos , are mainly represented by credit institutions, brokerage firms, investment companies and investment companies specialized in retirement funds.

The successful placement of government securities was achieved for the first time in 44 years and they will become the main source of government financing of the current federal administration for the development of the Mexican money market in the 2022-2024 period.

The holders of the winning titles will be able to exchange and place the government securities in the secondary market during the third decade of November 2022, through direct purchase-sale and repo operations, securities lending and use as underlying assets in the stock market instruments. derivatives to futures and options.

The direct purchase and sale of these securities can be made either by quoting their price, discount rate or rate of return, whose current market convention is to quote them through their rate of return by using the methodology to calculate the price and convert a rate of return to a discount rate and vice versa.

The successful results of government securities are based on theoretical foundations of 2020 Nobel Prize winners in Economics: Paul Milgrom and Robert Wilson of Stanford University, in recognition for their insights and contributions to economic science and inventing new auction formats in benefit sellers, buyers and taxpayers around the world.

Paul Milgrom formulated a general theory about auctions showing that higher prices are generated when buyers obtain information about each other’s estimated values ​​during the auction.

Robert Wilson was able to show that rational auction participants tend to underbid for fear of overpaying, teaching Alvin E. Roth, Bengt R. Holmström, and Paul Milgrom at Stanford University.

Alvin E. Roth, winner of the 2012 Nobel Prize in Economics, in recognition of his contributions to the design of markets based on the theory of stable allocations between supply and demand.

Bengt R. Holmström, winner of the 2016 Nobel Prize in Economics, for his contributions to contract theory by demonstrating and verifying the behavior of one of the contracting parties cannot be observed by the other. In particular, he discussed how the payment specified in a contract would have to depend on observable outcomes that are informative about behavior.

The results of the placement of government securities and high confidence of stock investors in the current federal public administration, will be reflected in the next 1778 calendar days expiring on September 30, 2027, in order to demonstrate and verify the correct, adequate and timely application of the contributions of Robert Wilson, 2020 Nobel Prize in Economics, Doctor Honoris Causa in Economics from the Norwegian School of Economics and Business Administration, widely known for his research on market design and industrial organization of the economy, being expert in game theory and its applications, important collaborator for the design of auctions and competitive bidding strategies, being professor at Stanford University of the following three Nobel Prize winners in Economics: Alvin E. Roth, Bengt R. Holmström and Paul Milgrom, and endorsed by Ben Shalom Bernanke, Douglas Warren Diamond, and Philip H. Dybvig who res Winners of the 2022 Nobel Prize in Economics were found.

Demonstrating the broad confidence of national and foreign stock investors in the current federal public administration for the expected results in the most successful swap and auction, through the Monetary Regulation System, was carried out by the Economist Rogelio Ramírez de la O , being the first Secretary of Finance and Public Credit graduated from the Faculty of Economics of the National Autonomous University of Mexico (UNAM) in this millennium.

Mexico is characterized by registering a record of federal public income of 22 trillion 031 thousand 335.21 million pesos and equivalent to an average collection of 15 thousand 747.92 million pesos per day in the current federal public administration.

The stability of public finances and the financial system to generate favorable conditions in the economic and social reactivation, is carried out without increasing or creating new taxes, zero external indebtedness, increase in the taxpayer base from the bottom up, reduction of unnecessary expenses, minimization of the prices of public goods, large additional federal income, growing savings due to strict austerity of the federal government, successful auctions, growing surplus and early payment of the external debt that allowed strengthening cooperation and identifying actions to achieve greater financial inclusion.

The results achieved allowed Mexico to be recognized by receiving the Liability Management Deal of the Year Award, Customs Merit to the National Customs Agency of Mexico (ANAM) by the World Customs Organization (WCO), Market Niche Bonus Award granted by the International Financing Review, rating for Mexico’s sovereign debt by the Kroll Bond Rating Agency (KBRA), DBRS Morningstar and Fitch Ratings, awarded to two Mexicans with appointments as Global Directors of the World Bank (WB), Recognition as a pioneer and leader in regulation and sustainable financing worldwide by the Coalition of Finance Ministers for Climate Change and placing Mexico in the Seventh World Power in economic value of exports by the World Trade Organization (WTO) surpassing Italy, Belgium, Singapore, France, Hong Kong, Canada, Chinese Taipei, the United Kingdom, Switzerland, India, Spain, Australia, Brazil, and Vietnam.

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Surprising Mexican auction