Pemex faces payments for 10,000 million dollars, while the government distances itself.
Mexican oil (Pemex), the indebted state oil company, seeks money to pay nearly $10 billion in bonuses this year, a sum that neither the company nor the government included in their annual budgets.
Although López Obrador promised that his government would step in to help the company if necessary, the finance ministry expects Pemex to pay off the debt in the first quarter.
The government stopped covering Pemex debt amortizations
After providing financial support to the oil company in recent years through tax breaks and capital injections, the government stopped covering Pemex’s debt repayments in the second half of 2022.
That led investors to wonder if the oil company will resort to international markets; he will try to sell unpaid bills of petroleum products, or look for other ways to get financing.
“It has become clear that, under this Administration, there will not be a meaningful Pemex bailout,” said Roger Horn, senior strategist at SMBC Nikko Securities America in New York. Large asset sales similar to the liquidation of state oil company Petróleo Brasileiro also seem unlikely, he added.
The company did not immediately respond to a request for comment.
Pemex, the ‘usual’ energy problem for the government
Mexico’s coffers have come under pressure from President López Obrador’s social programs and over-budgeted large public infrastructure projects, such as the Dos Bocas refinery and the Mayan Train, which cost more than double its original budget.
Oil profits have also fallen as a percentage of federal revenues due to a decline in long-term production and a reduction in Pemex’s profit-sharing obligations.
Pemex has laid out plans to try to avoid turning to the markets in a bid to keep its level of debt at around $105 billion through 2027 by seeking “low-key and innovative” financing alternatives.
International debt markets have become much more expensive due to aggressive tightening by the Federal Reserve, especially for speculative-grade-rated borrowers like Pemex.
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The company’s most recent move on debt, in June – to pay oil suppliers with bonds to be exchanged later – was deemed a failure due to weak demand.
The oil company also raised money last year by selling unpaid invoices for oil and petroleum products to banks, known as receivables monetization with factoring. In the second half of 2022, HSBC and Goldman Sachs delivered at least $1 billion to Pemex in a deal tied to their sale of accounts receivable. HSBC also linked it to Pemex reducing its greenhouse gas emissions.
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