SHCP to Reduce Foreign Debt Amortization Payments
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SHCP to Reduce Foreign Debt Amortization Payments

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Emilio Aristegui By Emilio Aristegui | Junior Journalist and Industry Analyst - Tue, 12/06/2022 - 12:29

The Ministry of Finance and Public Credit (SHCP) has deployed a strategy to ease the transition of Mexico’s new government in 2025, as the ministry continues to implement sustainable strategies to improve the country’s finances. 

“The Treasury will reduce the amortization payments of the Federal Government's foreign debt scheduled for the first year of the next administration by 70 percent. With the repurchase of two bonds carried out this year, one denominated in dollars and the other in euros, the deleveraging by 2025 will be equivalent to US$3 billion,” explained the SHCP via a press release. 

The Mexican government highlighted its commitment to release foreign debt payment pressures on the next administration to provide an adequate transition of power in 2024. The SHCP explained that next Thursday, Dec. 29, the early repurchase of a bond with an outstanding amount of €1.21 billion at a coupon rate of 1.375 percent and original maturity on Jan. 15, 2025, will become effective. 

The repurchase operation will allow the amortization payments of the Federal Government's external debt scheduled for 2025, which will modify the forecasted payment amount from US$4.2 billion to US$1.2 billion.  

“This operation is added to those executed by the Treasury, between July 2019 and August of this year in the international markets, which through the early repurchase of a total of nine external bonds, an aggregate amount of approximately 14.160 million dollars has been refinanced. This has been the largest refinancing carried out by an administration,” said the SHCP. 

The SHCP has also focused on following a sustainable financing strategy in 2022, following the introduction of sustainable financing tools to promote the UN’s Sustainable Development Goals (SDGs). Mexico has been one of the pioneers in the implementation of the new strategy. 

“We have an unparalleled opportunity to expand the scope of Climate Action based on the work we do every day to create and maximize a positive effect not only in the financial sector but also in the economy in general. We can no longer postpone climate action. It is time, as finance ministries, to lead by example and promote equitable, sustainable and green development and growth,” said Mexico’s Deputy Minister of Finance Gabriel Yorio, as reported by MBN. 

Photo by:   Image by Olichel from Pixabay

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