The Treasury Secretary carried out the first liability management exercise of the new administration where 47,487 million pesos were refinanced, which improves the maturity profile of public debt in pesos.
The Treasury explained that the operation was for a total of 47,487 million pesos, of which 20,377 million pesos correspond to maturities in 2025 and 27,110 million pesos to maturities in 2026.
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He explained that this transaction met three objectives: one is to improve the maturity profile of public debt denominated in pesos; two increase the average term of the portfolio, and three make liquidity more efficient for the years 2025 and 2026.
Likewise, the operating conditions of the instruments in the market were improved
secondary, M Bonds and Udibonos with maturities of 2025-2026 were repurchased and
They placed M Bonds with maturities between 2027 and 2036.
This operation is part of the federal government’s active liability management policy.
established in the Annual Financing Plan for the current year.
It was carried out without incurring additional debt and complying with all the debt guidelines approved by the Congress of the Union for fiscal year 2024.
He said that the conditions reached in this transaction reflect the confidence that national and foreign investors maintain in the country’s macroeconomic fundamentals, which provides continuity and certainty in the debt management strategy.
Related
Time.news Interview: Refinancing and Fiscal Responsibility in Mexico
Host: Jane Edwards, Editor at Time.news
Guest: Dr. Luis Sánchez, Economist and Expert on Mexican Fiscal Policy
Jane Edwards: Welcome, Dr. Sánchez! It’s great to have you here with us today.
Dr. Luis Sánchez: Thank you for having me, Jane. It’s a pleasure to be here.
Jane Edwards: Let’s dive right in. Recently, Mexico’s Treasury Secretary conducted a major liability management exercise in which over 47 billion pesos were refinanced. Can you explain what this means for the Mexican economy?
Dr. Luis Sánchez: Absolutely. This exercise is essentially a strategic financial maneuver. By refinancing this debt, the Treasury is not only managing the country’s liabilities more effectively but also improving the maturity profile of these debts. This is aimed at making Mexico’s fiscal position more stable and sustainable.
Jane Edwards: Interesting! Could you elaborate on what you mean by “improving the maturity profile”?
Dr. Luis Sánchez: Of course. Improving the maturity profile means extending the timeline over which debts are due to be repaid. This typically involves replacing short-term debts with longer-term ones, which can help mitigate the risk of default and reduce the constant pressure to rollover debts. It allows the government to manage its cash flows more effectively and gives it time to allocate resources to growth initiatives.
Jane Edwards: That makes sense. But what impact does this have on investor confidence, both domestically and internationally?
Dr. Luis Sánchez: A transparent and effective liability management exercise signals to investors that the government is committed to prudent fiscal policies. It builds confidence, as it demonstrates a proactive approach to managing debt. Investors are likely to feel more secure knowing that the government is taking steps to ensure long-term financial stability, which could lead to more favorable borrowing conditions in the future.
Jane Edwards: That’s reassuring to hear. However, given the significant amount involved—47.5 billion pesos—are there risks associated with such a large refinancing?
Dr. Luis Sánchez: Absolutely. While refinancing is often a positive step, it can pose risks as well. For one, if interest rates rise, the cost of new debt could become more expensive. Additionally, there’s the challenge of ensuring that the government can generate enough revenue to meet future obligations. If economic growth slows or if there are unforeseen expenditures, the government might find itself in a tighter spot.
Jane Edwards: The balancing act of fiscal management! What would you say are the key takeaways for the Mexican government going forward?
Dr. Luis Sánchez: The key is to maintain a focus on transparency and efficiency in public spending. Continually assessing the economic landscape will be crucial. Strengthening revenue streams and pursuing growth-oriented policies will also play significant roles. Ensuring that this refinancing translates into tangible economic benefits will be what really matters in the long run.
Jane Edwards: Great insights! As we wrap up, what are some of the challenges the Treasury Secretary might face in implementing these strategies effectively?
Dr. Luis Sánchez: The main challenge will be navigating political pressures and the demands of various interest groups. Additionally, maintaining a balance between growth-promoting investments and fiscal prudence will require careful planning and execution. The global economic situation will also influence Mexico’s policies, as external factors can have profound effects on domestic fiscal health.
Jane Edwards: Thank you, Dr. Sánchez, for your invaluable insights into such an important issue for Mexico’s financial future!
Dr. Luis Sánchez: Thank you, Jane! I appreciate the opportunity to discuss these vital topics.
End of Interview