Mexico Cuts Pemex Debt Burden by $3.2 Billion

Mexico Cuts Pemex Debt Burden by $3.2 Billion - ENB
  • President Lopez Obrador had announced the aid in December
  • The government refinanced short-term debt with a new 10-year bond

The operation will reduce the “financial pressure” on Pemex by $10.5 billion between 2024 and 2030, the ministry said, adding that the refinancing wouldn’t reduce the fiscal budget. The government contributed $3.5 billion to the operation, which helped narrow the spread to sovereign bonds by 50 basis points, reducing Pemex’s annual financial costs by $180 million.

Mexico’s President Andres Manuel Lopez Obrador announced a $3.5 billion capital injection into Pemex in early December, saying it would be made through a series of bond market transactions. That came on top of initiatives last year to cut taxes and overhaul management at the company.

Pemex is flailing under $113 billion of debt, the most of any major oil producer, struggling to reverse over a decade of crude output declines, and is highly reliant on the federal government being willing to continue paying bondholders.

Source: Bloomberg