BLACKROCK’S FINK IS CAPTIVATED BY PIMCO FAVORITE MEXICO
(First published by BLOOMBERG)
For Laurence D. Fink, who oversees $3.86 trillion as BlackRock Inc. (BLK)’s chief executive officer, there’s no better place to invest than Mexico.
“Mexico is at the beginning of a real revolution,” Fink said Oct. 3 at an event hosted by the University of California, Los Angeles, in Beverly Hills. “You’re going to have a tremendous opportunity.”
While American politicians are deadlocked in a budget standoff that has forced a partial U.S. government shutdown, Mexican President Enrique Pena Nieto has garnered support from the biggest opposition party for his proposal in August to end the state oil company’s 75-year monopoly. Fink said the plan would turn Mexico into one of the world’s biggest energy producers and unleash an investment boom — making the nation his favorite international destination to put money.
Fink’s bullishness on Mexico is echoed by overseas debt investors including Bill Gross’s Pacific Investment Management Co., the world’s biggest bond fund manager. Their purchases of Mexico’s peso-denominated debt soared 75 percent to $4 billion last month as foreign holdings reached a record. The notes returned 4.9 percent in dollars in the past month, exceeding the 4.18 percent average gain for emerging markets, while Mexico’s 10-year bond yields fell by the most in 15 months.
BlackRock’s Emerging Market Local Debt Fund has 9.9 percent of net assets in Mexican securities, more than any other country, according to a second-quarter fact sheet. [bn:PRSN=16409052] Melissa Garville, a spokeswoman for BlackRock, declined to comment on the fund’s current holdings in Mexico. The energy proposal is fueling investor interest in Mexico as the U.S. Federal Reserve maintains its unprecedented stimulus that’s propped up emerging-market assets with cheap money.
Bond market gains have also been supported by the Mexican central bank’s reduction of interest rates in September for the second time this year to propel the economy.
Concern earlier this year that the Fed might taper its bond-buying program triggered the biggest developing-nation rout in four years. Gross wrote in a monthly report in August that Mexico’s push for structural reforms will help the country “weather the storm.”
Pimco’s $250 billion Total Return Fund is the biggest holder of the country’s 2024 bonds, data compiled by Bloomberg show. Mexico also has the highest allocation among countries in Pimco’s $12.7 billion Emerging Local Bond Fund, at 17.1 percent, according to its August monthly report.