Mexico Prepays Dollar Bond Due 2025 in Bid to Calm Markets

(Bloomberg) -- Mexico paid off a dollar bond due next year in a bid to calm a selloff triggered by the ruling party’s sweeping victory in this month’s election.

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The government called the $894 million outstanding on a note due April 2025, part of $4 billion worth of refinancings it is carrying out for upcoming maturities, according to a statement from the Finance Ministry. Deputy Finance Minister Gabriel Yorio wrote in an X post that the government would also refinance local debt coming due in next year.

“We’re monitoring markets to continue with financial operations that benefit liquidity,” Yorio wrote in the X post.

A lopsided victory for President-elect Claudia Sheinbaum and the Morena Party has riled markets since June 2 as investors grow concerned the government will seek to quickly move forward with a series of constitutional reforms that are perceived to weaken institutions, such as by allowing judges to be elected by popular vote.

The peso has lost more than 10% of its value against the US dollar and stocks and bonds have also fallen.

The 2025 prepayment allows the government to clear its main dollar-denominated obligations coming due next year, according to data compiled by Bloomberg. The move appears to be part of a series of government steps that seek to curb volatility, including statements from Sheinbaum that the economy is solid and the confirmation that Finance Minister Rogelio Ramirez de la O will remain in his post.

“In transition years the outgoing government tends to leave things a smooth as possible for the incoming administration, and prepayments are one of the ways to do that,” said Claudia Ceja a strategist at BBVA Mexico.

(Recasts with context and ministry statement throughout.)

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