Mexico announces $3.15 bn bond buyback

November 1st, 2008 - 2:19 pm ICT by IANS  

Mexico City, Nov 1 (IANS) The Mexican government has said it will buy back up to 40 billion pesos ($3.15 billion) in bonds in a bid to boost liquidity and promote stability in financial markets in the wake of the global recession.The measure is consistent with earlier steps to ensure orderly markets sideswiped by the global financial crunch, EFE quoted a finance ministry communique as saying.

Mexico will repurchase fixed-rate bonds with maturities of up to 30 years that are denominated either in pesos or in investment units called Udis, which is an inflation-indexed financial instrument, the statement said.

The move followed Monday’s announcement of various measures to bolster the country’s financial markets, including a reduction in future bond issues.

President Felipe Calderon’s government says the recent actions are meant to avert volatility in interest rates and the currency markets, where the peso came under strong pressure that forced the treasury to sell some $13 billion in dollars over the past few weeks.

Even as Mexico tries to keep its house in order its close link to the US economy has caused a steep economic downturn devastating the peso and sending many Mexican companies down the hill.

The country’s economy contracted 0.3 percent in August from a year earlier and the central bank says economic growth next year could be as little as 0.5 percent, down from about 2 percent this year.

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