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Pemex gets $3.8 billion from Mexico government, considers tapping bond markets again
July 29, 202312:10 AM GMT+5Updated 2 days ago
Mexican state energy company Pemex, whose financial debt ballooned to $110.5 billion by the second quarter, said Friday that it received 64.9 billion pesos ($3.8 billion) from the government to meet its obligations and may tap bond markets this year or next.
It made the disclosure in a filing with the local stock exchange.
Chief Financial Officer Carlos Cortez told investors during an earnings call that despite “significant” government support, Pemex was evaluating whether it would tap bond markets this year or next. He gave no details on how those funds would be used.
Pemex is also renewing revolving credit lines with banks.
When asked about debt targets, Cortez said, “We’re committed to sustaining a downward trend.”
Natural resources nationalist President Andres Manuel Lopez Obrador has staked his reputation on reviving Pemex, which he inherited highly indebted.
But concerns over the debt, the most of any state energy company in the world, has been increasing since he took office in late 2018.
Under Lopez Obrador’s presidency, Pemex bonds were stripped of a coveted investment grade rating. Two out of the three major ratings agencies rate the bonds speculative grade, or junk.
Earlier this month, Moody’s Investors Service lowered its outlook on Pemex’s credit ratings to negative from stable.
The ratings agency said Pemex has been unable to increase capital investments and improve its financial and operating performance as a result of liquidity constraints.
Pemex Chief Executive Octavio Romero dismissed the action on Friday, adding that the assessment did not sufficiently take the government’s support into account. “Pemex rejects the actions taken by these agencies,” Romero said.
Between 2019 and the end of the second quarter, Pemex received more than 720 billion pesos from the government, the results showed.
Net profits were down almost 80% to 25.439 billion pesos in the second quarter from the year-ago period as sales fell, and revenues were down more than 40% to 414.156 billion pesos following weaker local sales and crude oil prices.
Crude production, including condensates, rose 7.1% to 1.882 million barrels per day (bpd), while refining rose 3.7% to 826,000 bpd.
Reporting by Valentine Hilaire, Adriana Barrera and Stefanie Eschenbacher; Writing by Stefanie Eschenbacher; Editing by Anthony Esposito, Richard Chang and Cynthia Osterman.