Testing Market Confidence

Testing Market Confidence

Mexico

In 1995, just as Mexico was crawling out of the peso crisis, the ailing sovereign found its salvation in the international debt market. In December 1994, the country had sunk into financial crisis when the government devalued the peso, nearly killing off the country's banking system. It took a $20 billion line of credit from the US Treasury, backed by Mexico's oil reserves, to pull the country back from the brink of collapse in February 1995. Under the agreement, Mexico had until 2000 to repay the loan, which it planned to do by issuing debt in the international bond markets. Mexico last tapped the international market in 1993 with a $200 million, five-year Euromarket bond issue.

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