Mexico

Mexico’s finance ministry and banking regulator extended tools to allow banks and financial intermediaries to restructure loans and other credits to clients, senior officials said Wednesday, in the government’s latest push to help an ailing economy, Reuters reported. The measures will extend until next year several temporary rules designed to avoid defaults and loss of collateral, in what Finance Minister Arturo said was a recognition that the economy will remain fragile for some time.

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In an attempt to help its battered economy recover from the impact of the coronavirus pandemic, Mexico’s central bank said on Tuesday that it has extended measures designed to strengthen credit channels and provide liquidity in the financial system, Reuters reported. Banxico said liquidity facilities first announced in April will be extended until the end of February 2021, while a government securities repurchase window is being increased by a further 50 billion pesos ($2.37 billion). So far, Banxico said, the measures have been successful.

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Bonds sold to finance a $13 billion airport in Mexico City that was ultimately scrapped are among the region’s worst performers as investors question the revenue stream that backs them, Bloomberg News reported. Notes due in 2047 from the Mexico City Airport Trust had a volatile first half and are now poised for their fourth straight weekly decline. Their drop to 86 cents on the dollar from above par at the beginning of the year is the seventh-worst performance in the Bloomberg Barclays Latin America Bond Index. The notes have a tumultuous history.

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Mexico’s finance ministry is considering extending relaxed banking credit rules to help its battered economy recover, a top official said on Wednesday, after it presented an austere 2021 budget that leaves little room to maneuver, Reuters reported. Deputy Finance Minister Gabriel Yorio said the ministry was in talks with the banking industry and the central bank about the possible extension until next year of the temporary measures designed to avoid defaults and loss of collateral.

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Fitch Ratings downgraded Offshore Drilling Holding, S.A.'s (ODH) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'C' from 'CC,’ Fitch Ratings reported. Fitch also downgraded the company's USD950 million senior secured notes due Sept. 20, 2020 to 'C'/'RR4' from 'CC'/'RR4'. The downgrade reflects ODH's ongoing negotiation with its bondholders' representatives regarding a potential restructuring of the company's capital structure, as disclosed on Aug. 11, 2020.

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The collapse of a Mexican lender is spurring concern about risks for the banking system just as the country sinks into its deepest recession in almost a century under the watch of a financial regulator that’s been hobbled by austerity, Bloomberg News reported. Banco Famsa will need a bailout of almost $1 billion to make depositors whole. Its failure is fueling worries among former officials that the watchdog known as the CNBV could miss warning signs at other lenders after a wave of resignations followed President Andres Manuel Lopez Obrador’s drive to cut costs.

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Mexican airline Aeromexico, which is in a Chapter 11 restructuring process, said on Tuesday it posted a $1.2 billion net loss for the second quarter and laid off about 2,000 workers as the coronavirus pandemic roils the airline industry, Reuters reported. “The commercial aviation industry faces unprecedented challenges stemming from a significant reduction in passenger demand worldwide,” the firm said in a statement.

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Latin America is at the centre of the coronavirus pandemic, suffering some of the worst infection rates and highest death tolls in the world, the Financial Times reported. Now economists warn that the region faces more bad news: its sickly economies risk falling into a new debt crisis even worse than the last big bust of the 1980s. The continent was struggling with multiple “pre-existing conditions” before the virus took hold: anaemic growth, weak health systems, low tax revenues, high levels of borrowing and an over-reliance on commodity exports.

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Mexico’s Interjet said on Monday it received a $150 million capital injection to help the company through a major restructuring in a bid to offset the crisis in the airline sector as the coronavirus pandemic choked global travel, Reuters reported. Interjet, one of Mexico’s three biggest airlines with a portfolio of more than 50 routes, announced restructure plans last month as local media speculated about the carrier’s financial health.

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Mexico’s government on Thursday ruled out a financial rescue of the country’s airlines, which have been hammered by a sharp drop in global demand for travel and restrictions imposed due to the coronavirus pandemic, Reuters reported. Aeroméxico announced in late June the start of a restructuring process under Chapter 11 bankruptcy proceedings in the United States, while rival Interjet has also been struggling under the burden of coronavirus-imposed restrictions.

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