Mexico

Syndicate bankers say that larger than normal new issue concessions being paid by US investment-grade corporates in bond markets mean Latin American borrowers are in no rush to get the year started.

Mexico’s new president Andrés Manuel López Obrador (Amlo) is free to proceed with his proposed cancellation of Mexico City’s new airport after bondholders agreed to waive clauses that would have triggered an event of default.

Battling a host of problems — local and global — Latin American bond markets suffered a torrid 2018. Many issuers stayed away, high yielders struggled to find financing and investors booked losses. With more volatility expected, political developments in LatAm’s three largest economies could make or break the region’s bond markets in 2019. Oliver West reports.

Bond and currency markets rallied on Monday after Mexico’s new president Andrés Manuel López Obrador (Amlo) presented a budget that Fitch said marked a continuation of Mexico’s existing fiscal framework.

Mexico City Airport Trust (Mexcat) offered an improved deal to bondholders this week as it seeks to make the documentation changes necessary to allow it to cancel its Texcoco airport project, but analysts said the new government has a long way to go before regaining the trust of markets.

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.