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AMLO, airport investors resolve dispute and peso rallies

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Plans for the new Mexico City airport have been canceled. Photo: Courtesy

The peso jumped 1.2 percent to a six-week high after news that a majority of bondholders backing the new Mexico City airport accepted the government’s offer to buy back $1.8 billion in debt.

President Andres Manuel Lopez Obrador has said he will cancel the airport project, which he called overpriced.

Bondholders rejected the deal until the Finance Ministry sweetened the offer last week.

The government will now spend $1.8 billion — taken from an existing trust for the airport’s construction — in an expensive buyback with investors.

There is no indication of what will be done with the partially-completed project in Texcoco, which as of now has zero value.

The improved offer, capped at $1.8 billion of $6 billion outstanding, includes a buyback price of par plus accrued and unpaid interest. Over 70 percent of bondholders reportedly participated in the consent.

Lopez Obrador said that the bond deal cleared the way for development of the military airport in Santa Lucia, which will serve as a second airport hub for Mexico City.

“This was because of a responsible attitude from investors, and for us it means the fulfillment of all our promises. It was very good,” Lopez Obrador told reporters, in Spanish.

Lopez Obrador scrapped the original airport project after a widely criticized referendum organized by his own party.

Situated in the Mexico City suburb of Texcoco, northeast of the capital, the new airport was slated to replace the cramped and aging Benito Juarez International Airport, Latin America’s busiest last year.

One U.S. dollar today buys 19.94 pesos.

Source: Bloomberg

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