Debt Free News

Mexico to make big buyout in new debt exchange

January 8, 2007

One thing right of the bat – if Mexico can do it – our debt free news article readers can do it. What is it you say? Buying back bonds to repay debt is what it is. Think of this debt free news report as an inspiration if nothing else. If you are reading this debt free article, chances are you have some debt issues. Maybe you are trying to get a debt consolidation loan or eliminate your debt some other way. Well, world economy and financial stability is good for everyone – consumers in the US too. After all, this debt free article is about Mexico’s new plan to buy back some of its debt by the way of bonds paid to investors – and that is good for both parties involved.

In fact, the South of the Boarder country has already said that it has just released a whopping $2.8 billion worth of bonds, paying investors with cash and longer term securities in a plan to expand maturities.

The Mexican government stated that it has issued dollar bonds that will mature in due in 203. This is the Mexican government’s longest due date for bonds in foreign markets. In the plan, Mexico is replacing some $2.39 billion of bonds that are maturing between the years 2019 and 2031 and lastly bonds that mature in 2033. Additionally the Mexican government bought back $405 million of the shorter term dollar bonds with actual cash. This is a good debt move.

The often beleaguered financially country removed lightly traded securities from its market and more than doubled the amount outstanding of the 6.75% bond that will come of age in the year 2034. The doubling brought it up to $3.8 billion from the previous amount of $1.5 billion. Our debt free news department got these figures from the report from the Finance Ministry in Mexico. The official report will be made on Friday we are told in our debt free news department and the buy back will take place then.

One thing for sure is that our debt free news article readers will now understand that this purchase is good for long term – see Mexico is exchanging a ton of liquid bonds for one huge amount of money – long term debt that is.

The country will sell the restarting subject of the bond that matures in the year 2034 to earn 6.27% on it. This is the lowest amount in Mexican history for a bond with this type of maturity. The country began to issue these bonds back near the end of 2004 in fact – then it was to earn about 6.88%. The plan to issue this coming Friday should save the Mexican government some where near $150 million or more according to our debt free calculations.

Many of our debt savvy patrons here at Debtfree24.com may be familiar Barclays Plc and Morgan Stanley. They are the 2 companies that are managing the deal on Friday. The country also stayed it course as far as pushing to pay down more foreign debt too. It goes hand in hand with the new issues of the local bonds and the currency bonds. See, by doing so, it better insures against the many times unstable peso.

When Mexico’s new President took his position in December 2006, he vowed to cut the country’s foreign debt in order to make Mexico more financially stable and less in debt to others. His self expressed plan is to cut the debt to about 4.7% of gross domestic product in his first year in office. Last year, the country’s foreign debt was just under 5%. Mexico’s last President really worked hard on this issue and achieved huge milestones that will definitely impress Mexico’s new President.  

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