Category: Regions

The International Finance Corporation (IFC), the private-sector arm of the World Bank, is to extend a line of credit of up to $40 million to Mexican low-cost air carrier Volaris. Most of the loan will be used to pay for extra aircraft to build up the airline’s fleet. The IFC has extended credit facilities to other air carriers in the region such as TACA, TAM, LanChile and Copa. Volaris, which began operating in March this year, is partly owned by Mexican broadcaster Televisa and local billionaire businessman Carlos Slim, among others.

Mexico is to launch a 30-year local-currency denominated bond before the end of the year as part of a strategy to move more of the country’s debt into the domestic market. Borrowing in local currency rather than foreign currencies will lower the country’s costs. Since 1995 Mexico has reduced its foreign-currency debt as a ratio of GDP from 32% to its current low of 8%. The sovereign is likely to issue around $90 million worth of the bond each year, according to deputy finance minister Alonso Garcia Tames, and will target Asian investors in particular.

The Mexican government has said it will sell its remaining 49% stake in airport operator Grupo Aeroportuario Centro Norte (GACN) in two months, hoping to raise around $300 million. In April this year the government rejected an offer by local construction firm ICA to buy its holding for $270 million and chose instead to offer it for sale via an IPO. ICA already owns 51% of the company and therefore had the right to bid for the outstanding shares. GACN has operations in 13 locations throughout the country, including Monterrey and the resort of Acapulco. In February the government raised $870 million from the sale of Grupo Aeroportuario del Pacifico (GAP), the country’s largest airport operator. The sale was the government’s largest IPO in 10 years.

Despite the uncertainty still hanging over the Mexican presidential elections, the winner of July 2 polls – Felipe Calderón of the ruling PAN party – has named his transition team. Calderón, whose party did not win a majority in Congress, has said he will form a government of national unity when he assumes the presidency later this year. The team will be led by his two closest aides: Juan Camilo Mouriño and Josefina Vazquez Mota. Calderón’s closest rival, left-of-center Andrés Manuel López Obrador (AMLO), has said he has proof of vote tampering but the country’s electoral institute IFE rejects the claim and says AMLO has no grounds for a reversal of the declared results. The electoral court considering the complaint has until September 6 to name Mexico’s next president, who will take control on December 1 from outgoing president, Vicente Fox.