December 17, 2018 / 12:48 AM / 4 months ago

Mexico not planning to improve airport bond offer: ministry

MEXICO CITY (Reuters) - Mexico does not plan to improve a Dec. 11 offer to repurchase bonds issued to fund a partly-built airport that the president is cancelling, the finance ministry said on Sunday, rejecting the complaints of a group of investors seeking a better deal.

In a statement, the ministry said the Mexico City Airport Trust (MEXCAT) does not intend to make further modifications to the sweetened offer it made for the bonds last week.

“If the revised offer is not successful on the terms currently proposed, MEXCAT and the Mexican government will reconsider what alternatives are available to achieve the government’s objectives,” the ministry said.

Mexico launched a buyback offer earlier this month for $1.8 billion of $6 billion in bonds that were issued to fund the airport. However, the investor group, which calls itself the MexCAT Ad Hoc Bondholder Group, rejected the offer.

The airport trust on Tuesday said it had revised the offer, saying it would buy notes at a fixed price of $1,000 per each $1,000 principal of notes tendered, rather than at prices between $900 and $1,000, alongside other modifications.

The dispute with bondholders was widely anticipated after President Andres Manuel Lopez Obrador said on Oct. 29 he would scrap the airport, a few weeks before he took office. His decision sparked a major sell-off in Mexican assets.

The bondholder group acknowledged the Dec. 11 offer was an improvement, but again rejected the proposal.

The ministry said the revised offer took into account feedback “from a wide variety of market participants” and included enhancements in the interests of noteholders.

It invited the market to study an almost 200-page document laying out details of the revised terms.

The offer would reduce MEXCAT’s outstanding debt by up to 30 percent, and established principal accumulation accounts that are expected to reduce total net debt by a minimum of an additional $1 billion within five years, the ministry said.

It noted that MEXCAT and its representatives have been in contact with advisors “who purport to represent an ad hoc group of holders, and who have declined, despite repeated requests, to provide the identities or holdings of the group.”

“The points advanced by those advisors have been reviewed with them and considered. However, we believe the revised offer addresses the principal concerns of the noteholders,” it added.

Reporting by Sharay Angulo; editing by Dave Graham and Chris Reese

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