BBVA’s Perez Samano to Sell Mexican Inflation Bonds

Jan. 14 (Bloomberg) -- Jorge Perez Samano, the biggest manager of Mexican peso-denominated bonds, plans to start selling his inflation-linked debt holdings next month as the government cuts energy prices to combat a deepening economic slump.

Perez Samano, who manages 480 billion pesos ($34 billion) at BBVA Bancomer SA in Mexico City, said he expects inflation to peak in January and slow to 4.5 percent by year-end. Annual inflation reached 6.5 percent in December, the highest in seven years, as a weakening peso drove up prices on imports.

“We may be getting out of our positions in the first few days of February,” Perez Samano, 52, said in an interview in his office in northern Mexico City. Bancomer’s biggest government- regulated pension fund held 33 percent of its assets in inflation-linked bonds as of November. Slowing inflation “could cause a drop in appetite” for the securities, he said.

President Felipe Calderon is increasing energy subsidies to put more money in consumers’ pockets, part of a stimulus package aimed at keeping Latin America’s second-biggest economy growing amid the global recession.

Yields on Mexico’s 5 percent inflation-linked bonds due in 2016 rose five basis points, or 0.05 percentage point, today to 3.62 percent, according to ING Groep NV’s local unit. The yield has fallen 2.48 percentage points since peaking at 6.1 percent on Oct. 24.

Rate Cuts

Calderon’s plan will allow the central bank to reduce its key lending rate by a half percentage point to 7.75 percent at a Jan. 16 policy meeting, said Perez Samano, who is head of asset management at Bancomer, Mexico’s biggest bank. His prediction matches the median forecast in a Bloomberg survey of 21 economists. A rate cut would be the first since April 2006.

Speculation the central bank will keep lowering rates through year-end makes Mexican fixed-rate bonds attractive even after a two-month rally, Perez Samano said. He predicts Banco de Mexico will cut the benchmark rate to 7 percent by December.

Yields on Mexico’s benchmark bonds maturing in 2024 have fallen 3.59 percentage points after reaching a 3 1/2-year high of 11.4 percent in November. The yield on Mexico’s medium- and long- term bonds may fall to as low as 7.4 percent in the first half of the year, said Perez Samano.

The yield on the 2024 bonds rose eight basis points today to 7.81 percent at 5 p.m. New York time. The price on the securities fell 0.79 centavo to 119.87 centavos per peso, according to Banco Santander SA.

Modelo, America Movil

Perez Samano said he has no plans to buy stocks soon after paring holdings in his government-regulated pension fund in December. His fund held 5.9 percent of assets in local stocks as of November, below the 7.9 percent average of the 18 funds in the pension fund system. The fund is the third worst in the pension system in the three years through November, according to government data.

Mexican stocks will keep declining over the next few months as the U.S. recession trims demand for the country’s exports and curbs investment and immigrant remittances, Perez Samano said. The Bolsa index has fallen 9 percent this year to 20,369.23.

“The Mexican Bolsa doesn’t have many drivers in the first quarter,” Perez Samano said. “Growth will be close to zero.”

Economists that cover Mexico are forecasting the economy will contract 0.1 percent in 2009, according to the average of 32 estimates in a central bank survey published last month. Gabriel Casillas, an economist at UBS AG in Mexico City, forecast yesterday that the economy will shrink 2 percent this year, compared with a previous estimate of 0.2 percent growth.

Perez Samano said he may start buying stocks if the Bolsa falls below 19,000. He listed Grupo Modelo SAB, the brewer of Corona beer, and America Movil SAB, Latin America’s largest mobile-phone company, as stocks he would be interested in.