In contrast to the original Farac II package, which failed to attract much interest at an auction early in March, the new one will be split into two. "After the package didn’t make the minimum price requirements last month we have been looking at ways of making the package more palatable," says Gerardo Rodriguez, deputy undersecretary for public credit in Mexico. "It makes sense to have two smaller pieces rather than a single large package in this market environment." A senior Latin America debt banker agrees. "Smaller bite sizes will be helpful," he says. Rodriguez adds: "The banks like it – they are asking us to relaunch it and want to participate. We plan to launch in the next few days."
The government raised $4.8 billion from selling the first Farac package and hoped for about $2.5 billion this time. However, the financial crisis means that investors will no longer be able to raise similar funds.
"At the start of the crisis the banks’ capacity for syndication just collapsed," Rodriguez says. "Before, banks were happy to take on big commitments because they knew they could then syndicate it in the market.