THE DEBT SWAPPERS
Mexico’s position looked hopeless. Ita talks with the IMF were breaking down. The Bank for International Settlements had just said that it couldn’t help. The peso was plummetting — in 10 days it had fallen by almost 50%. Even the Federal Reserve Board chairman had become sufficiently concerned to make an emergency dash to Mexico City to see the then finance minister, Jesus Silva Herzog. His mission: to head off an apparently imminent default by the Mexicans on their foreign debt.
Despite all this — and Silva Herzog’s departure a week after Volcker’s mid-June visit — the price of most Mexican debt on the secondary loan market was firm at around 60.
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