Earlier today, Mexico came out with a press
release with a far-from-natty headline: "Mexico Announces Clearing
Spreads, Reference Yields and Preliminary Proration Factors in Connection With
Its Invitation for Offers." The first sentence, written in fluent and incomprehensible
legalese, is 104 words long.
The press offices at Goldman Sachs and Morgan Stanley, which were coordinating
the deal, were promptly swamped with phone calls. (Well, there were a few.)
The market only cared about one thing: Mexico is buying back bonds, so how many
bonds is it buying back? The press release didn’t answer that question.
Much later in the day, well past 6pm on a Friday afternoon, when market participants
have long since left for the weekend, the second
press release finally came out. The market had already learned, at that
point, that Mexico’s much-hyped new bond issue, which was meant to be as big
as $5 billion, would in fact be only $3 billion. So the question that everybody
wanted answered was whether the buyback had been scaled back commensurately.
Was Mexico still going to spend $5 billion cleaning up its yield curve, or was
it only going to spend $3 billion?
The press release was, to put it mildly, not useful on that front. It told
you how much of each bond Mexico was buying back, and it told you the purchase
price for each bond, but it didn’t tell you the total. For that, you needed
to take each bond, multiply it by the purchase price, and add them all up. (You
also have to multiply the euro and sterling denominated bonds by their respective
exchange rates.) Of course Mexico knew full well how much money it had spent
on its buyback, but for some reason it didn’t want to just come out with the
number.
So, to save other journalists and analysts the efffort, here’s
the calculation. It’s not completely exact, since it’s impossible to know
how much Mexico spent on accrued and unpaid interest, or to know what exchange
rates were in effect when the deal was done. (I used 1.2020 for the euro, and
1.7547 for the pound.) The final number? $3,017,269,420. Why
Mexico’s forcing me to do all those sums myself, I have no idea.