Holders of more than $1bn of the bonds issued to finance a new Mexico City airport that President Andrés Manuel López Obrador wants to scrap have rejected an offer by the government to buy back some of the debt, the Financial Times reported. The bondholder group said it could not support the plan, which would also alter the terms of the remaining debt — bonds that currently have a claim on revenues from the new airport.
Mexico
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On the eve of the inauguration of Andrés Manuel López Obrador as Mexico’s next president, his administration is looking to restructure $6bn worth of bonds backing the partly completed Mexico City airport whose future was put in doubt in October, the Financial Times reported. “We will begin negotiations to seek a fair treatment with investors and to respect their rights as bondholders,” said an aide to Arturo Herrera, incoming deputy finance minister. A plan could be announced as soon as Monday, according to people familiar with the matter.
Mexico City’s airport bonds finally showed signs of stabilizing Wednesday after President Andres Manuel Lopez Obrador caught investors by surprise with his decision to scrap the controversial project, Bloomberg News reported. Still, at just 80 cents on the dollar now, the bonds have had a rough October. Prices on the 30-year debt are down 3 cents this week and 9 cents this month, a slump that pushed the yield up over 7 percent.
Mexico’s credit risk is at the highest level since the days after Donald Trump’s inauguration. Five-year credit-default swaps that hedge against a drop in the value of Mexico’s sovereign debt have soared as the July 1 presidential election nears, Bloomberg News reported. Leftist Andres Manuel Lopez Obrador holds a commanding lead in the polls, and traders are concerned his victory could upend the economy just as the country is roiled by increasing trade tensions with the U.S. Other Mexican assets are also showing signs of stress as the election approaches.
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The Mexican peso sank to its weakest in more than a year on concern the U.S. may leave the Nafta agreement and try to negotiate two separate free-trade deals with Mexico and Canada, Bloomberg News reported. The currency slid for a fourth day, dropping 1.6 percent to 20.4031 per dollar as of 3:46 p.m. in New York, the second-sharpest retreat among major peers. The cost of insuring Mexican bonds in the credit-default swaps market for five years surged nine basis points to 146.501, climbing for a ninth day in the longest streak since June 2013. Stocks halted a two-day rally.
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The head of a Mexican congressional committee on Tuesday called for an investigation of an investment by state workers’ pension fund PensionIssste, after Reuters reported it spent millions on shares in a company spiraling toward bankruptcy, Reuters reported. PensionIssste spent around 400 million pesos ($21.5 million) buying the largest stake in builder ICA (ICA.MX), even after its shares had fallen by more than half in the previous year, three people with knowledge of the investment told Reuters. It stands to lose almost all its investment in a restructuring.
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Mexico's state workers' pension fund plowed more than $20 million into ICA and became the largest shareholder as the builder spiraled toward insolvency, according to people familiar with the matter, with the fund's investment set to be wiped out in a restructuring, the International New York Times reported on a Reuters story.
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Mexican construction company ICA said on Monday that a judge had approved its creditors agreement, ending the group’s bankruptcy proceedings, Reuters reported. ICA suspended debt payments at the end of 2015 after a crash in the peso made its dollar-denominated debt load unbearable. The company entered into bankruptcy proceedings in September last year. Read more.
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Deal making by Mexican companies declined for the second year in a row in 2017 on concerns about the future of free trade with the U.S. and uncertainty related to next year’s presidential elections, the Wall Street Journal reported. Mergers and acquisitions involving Mexican companies and assets totaled $23.7 billion in dollar terms, a decrease of 5 percent from 2016, according to data compiled by Dealogic. There were 230 transactions in 2017, compared with 241 the year before. “The main reason is the significant uncertainty related to the economy and free trade.
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Mexican construction company ICA said late on Friday it and its subsidiaries had filed a pre-packaged bankruptcy plan that had been subscribed to by the majority of its creditors, Reuters reported. ICA, which has been struggling under a high dollar-denominated debt load, said the plan had been filed in accordance with the statutes of Mexican bankruptcy law. Read more.
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