- Last year, foreign investors started to add positions in Udibonos and this trend has continued throughout the year. Foreigners have typically been small players in the Udibono market. However, this year they have dominated flows to both Cetes and Mbonos and, since 2Q22, the pace of inflows to these assets has accelerated.
- Udibonos returns in the last two years have outperformed most asset classes and as long as inflation remains under pressure, returns should remain positive.
- We believe Udibonos total return for the next six months is attractive, especially at the short end of the curve. Hence, we continue Overweighting Udibonos (we have been Overweight since the 2H21); in particular, we prefer the Udibonos 2023, 2025, and 2026 as their expected return is above 11.0% in annual terms.