Mexico airport bond buyback hits resistance from investor group

12/06/2018 – Reuters

14946569737_77e2f48637_bMEXICO CITY, Dec 5 (Reuters) – A group of investors in bonds issued for the construction of a new Mexico City airport that the government is scrapping has pushed back against a buyback of the debt.

Mexico said on Monday that it would buy back up to $1.8 billion of $6 billion in debt issued to fund the airport.

The leftist government of President Andres Manuel Lopez Obrador, which took power on Saturday, has said it is canceling the partly-built project.

Read more…

Mexico airport debt plan alleviates short-term risks -Fitch

12/04/2018 – Reuters

14946569737_77e2f48637_bBy Vera Eckert

MEXICO CITY, Dec 4 (Reuters) – Credit agency Fitch said on Tuesday that the Mexican government’s proposal to reduce by up to $1.8 billion the outstanding debt of a canceled Mexico City airport project will alleviate some near-term risks.

Leftist President Andres Manuel Lopez Obrador, who took office on Dec. 1, said in October that he would scrap the $13 billion Mexico City airport, arguing that the project was tainted by corruption and would be expensive to maintain.

On the first weekday of his new administration, the Mexico City Airport Trust said it would buy back up to $1.8 billion of $6 billion in debt issued to fund the airport, in an offer that runs through the start of January. (Reporting by Veronica Gomez; Editing by Anthony Esposito)

Mexico offers to buy debt of canceled airport, but work continues

12/04/2018 – Reuters

(REUTERS/Alexandre Meneghini)

By Anthony Esposito

TEXCOCO, Mexico (Reuters) – Mexico said on Monday it would repurchase some of the debt used to fund a partly-built airport canceled by the new president, even as work at the site continued for the time being.

Veteran leftist Andres Manuel Lopez Obrador said in October that he would scrap the $13 billion Mexico City airport, arguing that the project was tainted by corruption and would be expensive to maintain.

On the first weekday of his new administration, the Mexico City Airport Trust said it would buy back up to $1.8 billion of $6 billion in debt issued to fund the airport, in an offer that runs through the start of January.

Read more…

Mexico Seen Hiking Interest Rate After AMLO Spurs Peso Plunge

11/15/2018 – Bloomberg

-1x-1.pngBy Eric Martin

Mexico’s central bank will raise its key interest rate Thursday after President-elect Andres Manuel Lopez Obrador’s decision to cancel a $13 billion airport sent the peso plunging and raised concerns about policy uncertainty, according to a survey of economists.

Policy makers led by Governor Alejandro Diaz de Leon are projected to lift borrowing costs, already at the highest level in almost a decade, another quarter point to 8 percent, according to the median estimate in a Bloomberg survey. Twenty-one economists see policy makers raising the rate, with six projecting it to remain unchanged.

Analysts began to forecast an increase two weeks ago after AMLO, as the leftist is known, said he would cancel construction of the new Mexico City airport already one third complete, spurring the biggest sell-off in the nation’s assets since 2016. While the central bank kept the rate unchanged last month, the board warned that it will take the actions needed to ensure its price goal is reached, and one of the five members voted for a hike.

Read more…

Construction Crews Exit Mexico’s $13 Billion Airport

11/08/2018 – Bloomberg

1600x-1By Andrea Navarro

What once was a busy construction site, with many thousands of workers building an airport on land the size of Manhattan, is slowly becoming a ghost town since Mexicos’s incoming president, Andres Manuel Lopez Obrador, pulled the plug on the project late last month. Cranes are coming down; teams are packing up. Even though the construction won’t be officially canceled until Dec. 1, when Lopez Obrador takes office, some companies have started preparing for the inevitable. Bloomberg News photographer Brett Gundlock took his third trip to the construction site, where he estimates that only about 25 percent of the workforce remains. Word has it that a holiday party has been moved up to next week—because who knows who will be around to celebrate in December?

Read more…

Mexico’s incoming president halts an airport project, and pays a price

11/2/2018 – The Economist

Source: Reuters

IN 2002 VICENTE FOX, then president of Mexico, ended a honeymoon with foreign investors by giving in to machete-wielding peasants and dropping plans to build an airport near Mexico City. On October 29th history repeated itself when President-elect Andrés Manuel López Obrador said he would halt construction of an airport after it was rejected in a vote involving barely 1% of the electorate. The move battered Mexico’s peso, which fell to its lowest level in four months, as well as its stockmarket and its bonds. Creditors, who had been hopeful on Mexico, turned hostile.

Mr López Obrador, a left-wing populist, had sought to reassure investors. Despite troubles in other emerging markets, investment in Mexico remained relatively buoyant; the optimism was bolstered by a new trade agreement with the United States. By putting a complex infrastructure project to a poorly conceived vote, the president-elect soured the mood.

Read more…

Mexico airport bondholders handed lesson in direct democracy

11/01/2018 – Financial Times

30-10-18-FOTO-AMLO-MENSAJE-770x433By Colby Smith and Robert Smith

When Andrés Manuel López Obrador won Mexico’s presidential election in July, the leftwing populist promised “a government by the people and with the people”.

Now some of the largest asset managers in the world are learning about the president-elect’s commitment to direct democracy first-hand, as the fate of their investment in $6bn of bonds backing a new airport in Mexico City hangs in the balance.

Following a “people’s poll” on the future of a $13bn Norman Foster-designed airport, Mr López Obrador declared on Monday that he would abandon the project after nearly 70 per cent of the votes were in favour of scrapping the project. The outcome rattled Mexico’s financial markets, knocking the peso to its weakest level in four months, but there is even more at stake for the owners of the bonds issued by the Mexico City Airport Trust to pay for the project.

Read more…

What is next for Mexico City airport after mega project axed?

10/18/2018 – Reuters

airbus-aircraft-airplane-587063MEXICO CITY (Reuters) – A decision on Monday by Mexico’s next president to scrap a partly built $13 billion Mexico City airport has raised questions about the feasibility of his alternative plan, and consequences of the change.

Andres Manuel Lopez Obrador, who takes office Dec. 1, justified his move based on the results of an informal referendum that called for abandoning the current project.

The U-turn is the latest step in a long-running saga over how to solve growing congestion at the Mexico City airport, where 40 million passengers pass through a year.

Read more…

Carlos Slim, Bondholders May Be Biggest Mexico Airport Losers

10/30/2018 – Bloomberg 

The list of potential losers from the cancellation of Mexico City’s $13 billion airport project starts with the nation’s richest man and goes on to embrace businesses, investors, airlines and passengers.

Incoming President Andres Manuel Lopez Obrador scrapped the partially built project Monday after an informal referendum last week implied most Mexicans opposed continued construction. The decision sent markets tumbling.

Among those set to lose are billionaire Carlos Slim, who owns most of a $1.6 billion Fibra E– a hybrid between a master-limited partnership and a real estate investment trust — issued by the group building the airport. The cancellation also leaves $6 billion in bonds up in the air, as well as operational difficulties for airlines and broader risk to the market and nation. Many investors are now concerned that Lopez Obrador will take similar decisions over oil contracts or mining projects.

Read more…

‘Who’s in Charge?’ Next Mexico Leader Clashes With Business Over Airport

10/30/2018 – The New York Times

7005433706_3b18944675_kBy Reuters

Mexican President-elect Andres Manuel Lopez Obrador’s decision to cancel a multi-billion dollar Mexico City airport has pitched him into conflict with business elites, auguring a rocky start to his plans to revive the economy.

The partly-built $13 billion (£10.1 billion) airport on the eastern flank of Mexico City was the biggest public works project of outgoing President Enrique Pena Nieto, intended to relieve pressure on the current hub and serve the metropolis for decades to come.

But during the campaign that catapulted him to a landslide victory in July, the left-leaning Lopez Obrador attacked the new airport as a nexus of corruption between business interests and the political class as he vowed to end graft in Mexico.

Read more…