The López Obrador Administration has doubled its bet to save the weak finances of Petróleos Mexicanos (Pemex). This Monday the Ministry of Finance has reported that it will make a capital contribution to the state oil company of 3,500 million dollars so that Pemex makes a buyback of bonds that in turn will allow it to reduce its external debt. The global debt of the state company exceeds 115,000 million dollars, making it the most indebted oil company in the world.
The Ministry of Finance has also detailed that Pemex will carry out a repurchase and liability management operation mainly focused on the short and middle part of the company’s yield curve, with the objective of reducing the risk of refinancing. “In this operation, Pemex offers holders of bonds in dollars the option of exchanging bonds maturing between 2024 and 2030 for a combination of a new 10-year bond and cash, and offers to buy back bonds maturing between 2044 and 2060,” refers. The operation does not contemplate refinancing the maturities of 2022 and 2023, given the commitment by the Treasury to ensure the budget to support the state oil company with the necessary equity contributions to cover them.
The Secretariat headed by Rogelio Ramírez de la O has insisted that in the second part of López Obrador’s six-year term, its coordination with Pemex will be intensified to improve the financial position of the oil company and will even make changes to the corporate structure and Company Management, aimed at achieving the objectives set. “Financial structures will be implemented to allow the public sector to co-invest in exploration and extraction projects and to improve the debt structure of the oil company.
Since the beginning of his government, the president of Mexico, Andrés Manuel López Obrador, has made it clear that his Administration’s commitment is to rescue the state energy companies, both Pemex and the Federal Electricity Commission (CFE). In the case of the world’s most indebted oil company, with a global liability of more than 115,000 million dollars, the rescue plan goes through an energy reform, an increase in public resources and a lower tax burden for the following year. As in previous years, Pemex will pay less for the Shared Profit Right (DUC), a tax that will drop from 52% to 40%. According to the Ministry of Finance, this injection of capital will not have an impact on public spending or on the Expenditure Budget.
The analyst Gabriela Siller warned that this new injection from the government in favor of Pemex could be “a bottomless pit” that puts pressure on public finances and represents a risk for the credit rating of Mexico’s sovereign debt. “The best thing would be for PEMEX to sell part of its assets and reduce the operating cost. With the sale of assets, it could pay off debt and begin to be financially autonomous, “he says.
Although globally the price of crude oil has risen, Pemex continues to report losses. In the third quarter of the year, the state oil company reported losses of 77,000 million pesos, a result that contrasted with the profit of 1,411 million pesos registered in the third quarter of 2020, according to its financial report sent to the Mexican Stock Exchange . According to the oil company, the negative result was due to a foreign exchange loss and an 80% increase in the payment of taxes and duties.
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