EFTA01446683.pdf

From: Vinit Sahni Sent: 1/14/2014 3:23:26 AM To: [email protected] CC: Paul Morri Tazia Smith Vahe Stepanian Nav Gupta Subject: Jeffrey - Mexico -> MBONO 30y look interesting [CI Classification: Confidential Jeffrey - was looking for value in the EM space, post the PDVSA analysis, started looking at Mexico... here is a trade I think makes sense -> buying MBONO 30y unhedged At around 7.5% yield, inflation probably in the 3-4% in the foreseeable future, and USD/MXN likely stable or stronger in real (deflated) terms, I think it is good value. The curve is steep. If you look at 10Y10Y UST and 10Y10Y MXN yields, the spread is above 500bp . Say inflation differential is 100bp higher in Mex and credit diff is 100bp (10Y CDS is about 100bp higher in Mexico although Mex has much better debt dyn}, this still leaves about 300bp of cushion for real depredation per year...In sum, it seems good value near term mark to market risk is slower pace of implementation of energy reform and a selloff in USTs happy to discuss further if u find interesting... MBONO 7 34 11/13/42 000 18 Apr -.. -- -- 103.438 MBONO 7 34 11/42 —93.1 Save As 94 Actions - crEdit WYable Yield 04/19/2012 01/14/2014 Mid YTH BGN MIMI" incornpare =MEM No Lower Dart :m Daily • t Se.rirylmh; h evem .7 300 .6 533 .6 030 ■ m'd Nield To Maturity 7.504 T High on 12/04/13 7.836 *5 500 [ 4- Average 1. Low on 05/02/13 6.740 5.313 NCO Dec !'liar Jun Sep Dec 2012 2013 2014 Australia 61 2 9777 8600 Brazil 5511 3048 4500 Europe 44 20 7330 7500 Germany 49 69 9204 1210 Hong Kong 852 2977 6000 Japan 81 3 3201 8900 Singopore 65 6212 1000 U.S. 1 212 318 2000 Copyright 2014 Bloomberg Finance L.P. SH 812823 EST GMT-5,00 H376-306-2 I4-Jon-2014 03'04'41 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 100994 CONFIDENTIAL SDNY_GM_00247178 EFTA01446683