Corporate Debt Restructuring Masterclass

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

Mexico’s finance ministry announced on Friday that it has received a payout of $2.38bn from its annual oil hedging program, which will cover 80% of the revenue lost due to falling oil prices. Mexico began its oil hedging program in the early 2000s designed to protect the economy from a crash in oil prices. Reuters reported that the hedge, the largest financial oil deal in the world, was at a price of $49/barrel. Alberto Ramos, head of the Latin America research team at Goldman Sachs said, “Given Mexico’s budget has still significant exposure to oil revenue, hedging that traditionally very volatile revenue stream is usually a good idea,” adding, “But oil revenue hedging is no substitute for sound economic and fiscal management and sensible oil sector policies: Strong operational, financial and strategic management of Pemex would also go a long way for Mexico to maximize its oil and gas wealth and protect the budget.” This is the fourth payout that Mexico has received from the hedging program, which has said to have costed LatAm’s second-largest economy about $1bn in the past.

Pemex’s 5.95% 2031s traded 1.7 points lower since last Thursday to 95.8 while Mexico’s 4.5% 2029s traded 0.3 points lower to 115.4 on the secondary markets.

For the full story, click here

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