Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Mexico’s government will take over this year’s regular debt payment for the heavily-indebted state-owned oil company Petroleos Mexicanos (Pemex). These “debt-amortization payments” are said to total over $6bn in 2021, with Pemex reporting a financial debt of $113.2bn at the end of 2020, despite numerous governmental capital injections.

“The president of the republic has offered, since the campaign, to rescue Pemex, and he is demonstrating that with actions” Chief Executive Officer Octavio Romero stated standing alongside President Andres Manuel Lopez Obrador (AMLO). AMLO mentioned that Pemex’s tax bill will be further reduced and that its oil output goal will be also sharply lowered to no higher than $2mn barrels per day. Pemex currently produces around $1.7mn bpd. “With this moderate production we’ll fulfil the commitment to replace, and that is the norm, 100% of the proven reserves. That way we’ll avoid the excessive use of fossil fuels, we’ll continue to act responsibly, and we won’t affect what future generations will inherit” AMLO explained. Moody’s estimates that Mexico’s fiscal deficit will widen to 4.1% of GDP this year, as Pemex continues driving up debt, and predicts that Pemex will require $14.7bn in governmental aid in 2021 alone.

Pemex´s dollar bonds were slightly higher with its 6.95% 2060s up 1.33 points to 86.47, yielding 8.1% and its 6.625% 2035s up 1.27 to 95.958, yielding 7.08%.

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