Mexico airport buyback gets bondholders’ nod

Bloomberg

A majority of bondholders accepted Mexico’s offer to buy back $1.8 billion in debt used to fund the construction of an international airport that President Andres Manuel Lopez Obrador has said
he’ll cancel.
There was “overwhelming” acceptance by bondholders, said Mexico’s Finance Ministry. The acceptance by bondholders will allow the government to avoid a mandatory repayment of all $6 billion in bonds that would have been triggered by the cancellation of the airport.
“This is a favourable result for the Mexican government,” said Omar Zeolla, a corporate debt analyst at Oppenheimer & Co. “It was approved as we had hoped and in line with market consensus.”
The announcement makes it cheaper for Lopez Obrador to dismantle the $13 billion airport project, a decision that had caused the peso and bond market to tank when he announced it in late October.
Bondholders had rejected the deal until the Finance Ministry sweetened the offer with a buyback price of par plus accrued and unpaid interest.
The tender offer was oversubscribed in all four of the bond series outstanding, according to a person familiar with the transaction, who asked not to be named as he is not authorised to speak publicly on the matter. Over 70 percent of bondholders participated in the consent.
Lopez Obrador scrapped the project after a widely-criticised referendum organised 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. The airport became a lightning rod during this year’s presidential campaign as Obrador vowed to cancel the project that’s more than a third of the way to completion.