The market for peso-denominated bonds issued outside of Mexico was initiated in 2004. The peso Eurobond market began with the issuance of a MXN $3,000 MM bond by the Inter-American Development Bank in April 2004, and the last issuance was a MXN $1,200 MM bond by the US Export-Import Bank in January 2008.

a. Explain what peso Eurobonds are.

b. What does their issuance reveal about the development of Mexican financial markets?

c. Would you expect peso Eurobonds to be issued as bearer bonds?

d. Who are likely investors in peso Eurobonds? Would you expect Mexican nationals to invest in such bonds?

e. Would you expect the cost of issuing peso Eurobonds as compared to domestic peso bonds to be about the same? Should there be cost of debt differences?

Explain.