Ask Your Advisor: What are the risks of investing in Mexico sovereign bonds? 

With the US government planning to impose tariffs on the rest of the world, its neighboring countries like Canada and Mexico have been thrust into the spotlight due to their substantial trade activities with the world’s largest economy. Mexico, in particular, is a major sovereign bond issuer that has provided our clients a means to diversify their portfolios and gain exposure to Latin America.

One of them is Anna (not her real name), a business owner who has been steadily growing her family’s wealth and investing in various fixed income products. Her portfolio only has up to a maximum tenor of five years in the event that her family would need the funds later on.

She recently contemplated investing in asset swaps on MEX 1.43 27JPY and MEX 1.3 29JPY, maturing in 2027 and 2029, respectively.