Euroclear Expands in Latin America

Terry Flanagan

Euroclear is developing an international link with Peru after the first Mexican company has just sold bonds through the Brussels-based international central securities depositor.

Peru’s Ministry of Economy and Finance and Euroclear have signed a memorandum of understanding to develop a new international link for Peru by the end of this year. Once implemented, the i-link will allow domestic Peruvian issuers to tap into the liquidity pool provided by Euroclear’s global investor client base and let Peruvian investors trade with international counterparties.

Alonso Segura Vasi, the Minister of Economy and Finance of Peru, said in a statement: “The development of this i-link will allow us to increase domestic liquidity, lower price volatility and reduce the financial cost of our sovereign bonds, ultimately boosting the development of the Peruvian public debt market. It will also provide both local and international investors a unique and cost-efficient channel through which to access the Peruvian capital market.”

This month Pemex, the oil and gas firm, sold 24.3bn pesos ($1.6bn) of bonds and became the the first Mexican company to issue debt through the new Cebures service with Euroclear which gives international investors access to domestic Mexican Peso denominated securities.

Rodolfo Campos, Pemex treasurer, said in a statement: “Having Mexican Peso denominated securities settle through Euroclear will provide international investors access to the world’s leading post-trade service provider, and we believe it will help to lay the foundations for the future growth of Mexico’s corporate debt market.”

Last December Euroclear had said it would begin servicing Mexican corporate debt instruments, known as Cebures, from 31 January 2015. The corporate bond service expands Euroclear’s existing link with the Mexican market for government debt and equities that was launched in 1995.

Last year Euroclear also launched international links for Panamanian government bonds, Russian municipal and corporate bonds, and equities; and Taiwanese-issued Renminbi bonds.

Last month Euroclear reported that assets under custody grew by 7.4% in 2014 to reach a record €26 trillion. The value of securities transactions settled grew by 10.6% in 2014 to an all-time high of €633.6 trillion.

Tim Howell, chief executive of the Euroclear group, said in a statement: “We remain focused on maintaining market stability, delivering the regulation-driven initiatives in our core European franchise and investing in capabilities and services that extend client value.”

Last September it launched DTCC-Euroclear Global Collateral Limited, the joint venture company with the US Depository Trust & Clearing Corporation.

Euroclear also made progress with its international ETF structure which aims to reduce the cost of settling ETFs in the fragmented European market though the use of one central securities depository. In 2013 BlackRock was the inaugural issuer. Last year Pimco and State Street adopted Euroclear’s international ETF structure with listings on Euronext and the London Stock Exchange.

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