Central America

Bondholders were never going to be satisfied with Mexico’s new government after it cancelled the airport project in which they’d invested $6bn. But though the issuer’s tender offer and consent solicitation is unlikely to be the administration’s last squabble with markets, it is still a good sign.

Mexico’s finance ministry showed it was willing to listen to investor concerns with a new improved tender offer from Mexico City Airport Trust (Mexcat), but for some bondholders at least it will not be enough to persuade them to participate.

A group of bondholders publicly opposing the proposal by Mexico City Airport Trust (Mexcat) to amend documentation in its bond documents now represents over half the issuer’s debt, according to the law firm representing them.

Mexico City airport bondholders are right to turn their noses up at attempts to modify documentation. But though the issuer’s offer will not be the new government’s last squabble with markets, it is still a good sign.

Mexico’s new government acted swiftly to show that it would at least engage with financial markets this week. But investors' reaction to a tender offer for Mexico City airport bonds suggested it was the beginning of a troublesome relationship.

Mexico City Airport Trust (Mexcat) bondholders finally found respite in secondary markets on Monday as the government-owned company, which had raised $6bn of debt for the now cancelled Texcoco airport, launched a tender offer and consent solicitation for the notes.

Edgar Madinaveitia, a managing director in Latin American debt capital markets at Credit Suisse, has left the bank, according to sources away from the bank.

Bonds issued by central American sovereign Costa Rica rallied as much as four points on Monday after the country's constitutional court gave investors a positive surprise, approving fiscal reform that should improve market confidence in the borrower.

Central American development bank Cabei (Central American Bank of Economic Integration) sold $100m of dollar bonds to Japanese insurance companies earlier this month to complete its financing needs for 2018, the lender said.

In a shortened week in the US there was still time for heavy volatility in Lat Am bond markets, with sharp moves in Mexico particularly concerning for DCM bankers.

Investors in Latin American bonds are giving thanks this week, as Wednesday brought some small respite on Wednesday ahead of Thursday’s US holiday. Some of the region’s more battered paper rallied slightly — though the consensus is still that issuance is finished for the year.

Bankers insist that the market, though deserted, is still open for at least a couple more weeks, but with the new issue premiums investors are demanding, it is difficult to persuade issuers to print.