MEXICO CITY: Mexico has sweetened its offer to compensate investors in a new airport that was controversially cancelled by President Andres Manuel Lopez Obrador, and is confident they will accept, the transportation minister said Wednesday.
Lopez Obrador, an anti-establishment leftist who took office this month, spooked markets when he scrapped the US$13-billion, (RM54 billion) Mexico City airport project after holding a referendum on the issue that was marred by irregularities.
Seeking to calm investor jitters, Mexico offered last week to buy back part of the bonds used to raise money for the sleek new airport, which is about one-third complete.
But the majority of bondholders rejected the offer, which would have repaid between US$900 and US$1,000 on every US$1,000 borrowed, under a process known as a “Dutch auction,“ in which the price is steadily reduced until a buyer is found.
Under the new offer, announced Tuesday night, Mexico would repay the bonds in full plus interest of one percent.
The government is offering to buy back up to US$1.8 billion of the US$6 billion in bonds under the scheme, and has “firm hopes” that enough investors will accept, said Transportation Minister Javier Jimenez.
“The finance ministry tells us they are very confident, very optimistic,“ he told Mexican TV network Televisa.
He admitted the government would lose money by cancelling the airport, but added: “We’ll lose less than if we had finished it.”
Lopez Obrador, who ran on a pro-austerity, anti-graft platform, criticized the new airport as an unnecessary mega-project marred by corruption.
He instead wants to repurpose an old military airbase to complement the capital’s current airport, which is aging and badly saturated.
But business leaders say the country needs the new airport.
One of the main backers of the project, Mexican billionaire Carlos Slim, warned during the presidential campaign that canceling the project would amount to “canceling the economic growth of the country.”
The government gave bondholders until Dec 19 to decide whether to accept the new offer. — AFP
