Mexico Swaps More External Debt

Mexico swapped a further $898.5 million of external debt for domestic debt Wednesday, with the exercise of its third (XW5) series of dollar warrants enabling investors to exchange dollar-denominated securities (UMS bonds) for peso debt (M bonds). Warrant holders exchanged $898.5 million of UMS bonds maturing 2007 to 2011 for 10,268 million pesos of local-currency M bonds due 2011. This is the third of four swaps that will see Mexico exchange around $3.3 billion of foreign-currency debt for peso-denominated debt. Last November, Mexico sold three series of dollar warrants to enable investors to swap $2.5 billion of dollar-denominated securities for peso debt. Then in March this year, the sovereign sold warrants to swap euro-denominated bonds worth $722 million (€600 million) into local-currency bonds due in 2013 and 2023. Mexico is hoping to bring down its foreign debt-to-GDP ratio to around 6% by the end of this year from around 12% in 2000.