The government bond market crash known as the Tequila Crisis occurred in Mexico.
Mexico’s crisis began in late 1994 after the government devalued the peso. The country had issued large amounts of short-term dollar-linked debt called tesobonos, and investors became concerned that Mexico could not meet its obligations after the currency lost value.
Capital fled, Mexican financial markets plunged, and the crisis threatened wider instability in emerging markets. The United States organized a major support package with assistance from the International Monetary Fund and other institutions. The intervention helped Mexico avoid default and stabilize its financial position.
The episode is also called the 1994 Mexican peso crisis. “Tequila Crisis” refers to the international financial shock associated with Mexico, not to a crash in the Mexican stock exchange alone.