Mexico Confirms It Completed 2019 Oil Hedge at $55 a Barrel

1/11/2019 – Bloomberg

pictBy Dale Quinn

Mexico’s Finance Ministry confirmed that it spent about $1.23 billion to protect 2019 revenues against falling crude prices in the world’s largest annual oil deal.

The oil producer locked in hedges at $55 a barrel, equivalent to the price approved by lawmakers for the 2019 budget, according to a Finance Ministry statement. The total expense comes to about 23.5 billion pesos.

Mexico has in recent years spent around $1 billion on average buying financial put options from Wall Street banks, a closely-watched set of trades that typically covers 200 million to 300 million barrels and has the potential to roil markets. The trade, also known as the Hacienda hedge, is considered the largest oil deal on Wall Street.

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AMLO’s Money Guy Sends a Message to Anxious Wall Street Crowd

1/9/2019 – Bloomberg

23-julio-2018.-AMLO-Conferencia-06-1024x683.jpgBy Nacha Cattan

In his first trip abroad as Mexico’s finance minister, Carlos Urzua had a message he clearly wanted to deliver to the New York investing community. It was, in essence: Don’t worry, the young administration of President Andres Manuel Lopez Obrador understands the laws of economics and isn’t about to try any radical experiments that could jeopardize Mexico’s financial health.

Over the course of an almost 40-minute interview that he packed into a day full of meetings with Wall Street financiers, Urzua emphatically, and repeatedly, stated that the government will not seek to engineer faster growth than the economy can realistically handle (a mere 2 percent this year); that it respects the autonomy of the central bank; that it’s slashing spending in some ministries; that there will be no tax increases and, if anything, possibly a tax cut to help turn around the state-run oil giant Petroleos Mexicanos.

The peso’s rally in recent weeks was an affirmation, Urzua said, of the market’s growing confidence in a leftist president many had feared, and he predicted excitedly that the currency could keep strengthening in coming weeks — to trade below 19 pesos per dollar or better.

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Mexican president nominates Esquivel, Heath to central bank board

1/9/2019 – Reuters

(REUTERS/Gustavo Graf)

MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador nominated left-leaning economist Gerardo Esquivel and independent economist Jonathan Heath to serve on the central bank’s five-member board, according to a post on a congressional website on Wednesday.

Lawmakers will need to approve Lopez Obrador’s nominations, which had been informally announced previously.

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Mexico’s New President Launches Ambitious U.S. Border Economic Plan

1/5/2019 – Time Magazine

border_usa_mexicoBy Associated Press

MEXICO CITY — President Andres Manuel Lopez Obrador has launched an ambitious plan to stimulate economic activity on the Mexican side of the U.S.-Mexico border despite recent U.S. threats to close the border entirely.

Mexico plans to slash income and corporate taxes to 20 percent from 30 percent for 43 municipalities in six states just south of the U.S., while halving to 8 percent the value-added tax in the region. Business leaders and union representatives have also agreed to double the minimum wage along the border, to 176.2 pesos a day, the equivalent of $9.07 at current exchange rates.

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Mexico says it has investor consent for airport bond buyback

12/19/2018 Financial Times

President Andrés Manuel López Obrador plans to scrap the $13bn Norman Foster-designed airport in Texcoco, on the outskirts of Mexico City © Reuters

In a bigger-than-expected vote of market confidence in Mexico’s leftist nationalist government, almost three-quarters of bond investors in an airport project that is destined to be scrapped tendered their paper in a buyback designed to avoid a messy default. But the overwhelming success of the offer does not mean that President Andrés Manuel López Obrador, whose supporters are dubbed “Amlovers”, has seduced investors permanently, analysts said. Mexico had issued $6bn in bonds to help pay for a $13bn Norman Foster-designed airport in Mexico City that is already one-third constructed. But Mr López Obrador’s decision to kill the project following an informal people’s poll in October, held even before he took office, stunned the market.

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Investor group rejects new Mexico airport bond buyback plan

12/13/2018 – Reuters

11227926_308216752682196_8676740954999549706_o.jpgMEXICO CITY (Reuters) – A group of investors holding bonds issued for a new Mexico City airport that President Andres Manuel Lopez Obrador has canceled said on Wednesday that it cannot support an amended bond buyback because problems still remain despite improvements to the plan.

The Mexico City Airport Trust, which is overseeing the buyback, on Tuesday said it would offer investors a better deal to repurchase bonds issued to finance the project, which Lopez Obrador scrapped to pursue a cheaper alternative.

The bondholder group, which says it represents more than half the $6 billion principal amount issue, also said it still wants to discuss its concerns with the airport trust.

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Mexican Inflation Rises More Than Expected on Food, Electricity Costs

12/07/2018 – The Wall Street Journal

MEXICO CITY—Mexican consumer prices rose more than expected in November, led by seasonal increases in electricity costs and higher food prices.

The consumer-price index rose 0.85% last month, the National Statistics Institute said Friday. The increase was smaller than the 1.03% rise in November 2017, and pushed the annual inflation rate down to 4.72% from 4.9% in October.

Core CPI, which excludes agricultural goods and energy, rose 0.25%, with the annual rate slowing to 3.63% from 3.73%.