Mexico defaults on a faster bond payment for a canceled airport

Mexico defaults on a faster bond payment for a canceled airport

by Kylie Madre

MEXICO CITY (Reuters) – The Mexican government no longer plans to increase the repayment schedule for $4.2 billion in maturing bonds issued to finance a partly built airport on the outskirts of Mexico City that was later cancelled, a senior transportation official said. Friday.

The canceled Texcoco project had been intended to relieve pressure at the capital’s airport for decades, but shortly after his election in 2018 President Andrés Manuel López Obrador ordered a halt to construction of the new facility, calling it expensive and tainted with corruption.

His government initially paid about $1.8 billion of the $6 billion in bonds issued to fund the ill-fated Texcoco airport, and now plans to stick to the set payment plan for the long-term bond.

“The Ministry of Finance asked that everything remain the same, and that is what will happen,” Deputy Minister of Transportation Rogelio Jimenez-Ponce told reporters.

Jimenez had previously said that the Finance Ministry was considering an early repayment schedule, as the money used to pay off the canceled airport bond currently comes from a use tax created by the existing Mexico City International Airport (AICM).

AICM will soon be taken over by the Navy and a handful of other airports currently operated by the Department of Transportation, and Jimenez has said that AICM will be handed over to the military department without the burden of bond repayments.

Jimenez stressed that “everything will be paid in the same way. It will remain the same.”

He added that once the Navy manages the AICM, which Jimenez said he expects to happen later this year, it has been decided to renegotiate the buyback with the Finance Ministry.

López Obrador opened the remote Felipe Angeles International Airport (AIFA) last year as an alternative to Texcoco Airport on an active military base.

Through his administration, the president has increasingly shifted aviation activities over to the armed forces.

(Reporting by Kaylee Madre; Editing by David Aller-Garcia and Diane Craft)

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