& Tobago


Very usefull links


News links




Dow Jones

Oil price



Views and News






Mexico's president stays silent on pledge to scrap $13 billion airport

Brett Gundlock /Bloomberg

Construction of the New International Airport of Mexico City.

- Confirming airport canceled could lead to $6 billion crisis
- Instead, AMLO wants to reach a deal with airport bondholders

By Nacha Cattan and Justin Villamil / Bloomberg

Petroleumworld 12 04 2018

Andres Manuel Lopez Obrador pledged to cancel a $13 billion airport countless times when he was a candidate and then as Mexico's president-elect. But now that he's taken office, the leftist politician is conspicuously silent on the matter.

That's because any government statement about scrapping the project could open the door for investors to declare an event of default on $6 billion of overseas bonds tied to its construction and demand immediate repayment. So the normally verbose Lopez Obrador, who prides himself on transparency, was notably evasive with journalists Monday.

It's part of his administration's strategy to placate investors who loaned money for building a new Mexico City hub and have since been told that the project isn't going to happen, sending prices for Mexican assets plummeting as analysts questioned whether the new government is committed to business-friendly policies. Officials on Monday unveiled an offer to buy back as much as $1.8 billion of the securities and create a revenue stream to repay the remaining notes, but it can only happen if a majority of investors agree to scrap the covenants that allow them to demand their money back if the airport is canceled.

“This issue with bondholders reveals just how complicated it will be to execute what Lopez Obrador wants,” said Benito Berber, the chief Latin America economist at Natixis. “These legal ramifications and mixed signals are part of the AMLO risk premium we're seeing in the market.”

The proposed changes would allow funds that pay the bonds to come from the current airport alone. But modifying the covenants would remove a key bargaining chip for investors, who could demand the full accelerated payment with the support of holders of just 25 percent of the bonds upon event of default. Roger King, an analyst at CreditSights, recommended in a note that investors reject the proposal to retain their seat at the negotiating table.

The government's offer to repurchase the notes for 90 to 100 cents on the dollar will stand until Dec. 10, according to Deputy Finance Minister Arturo Herrera. Investors who sell back their bonds quickly will get an additional payment of 5 cents on the dollar, while those who agree to the amendments but hold on to the notes will get a one-time “consent payment” of 0.75 cent on the dollar. Most of the notes now trade for about 85 cents on the dollar.

Bondholders had already organized before Monday's proposal and Hogan Lovells as a legal adviser, with plans to name a financial adviser soon. An official at Hogan Lovells didn't respond to a request for comment on the government's proposal.

All of this leaves Lopez Obrador playing for time to see if the offer can tempt investors to give up their rights in exchange for a quick cash infusion.

Original article


We invite you to join us as a sponsor. Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.


Story by Nacha Cattan and Justin Villamil from Bloomberg.

bloomberg.com 12 03 2018


We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95, '98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.