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Pemex CEO Confident that Mexico Will Refinance Its Debt
July 27, 2023
Pemex’s CEO Octavio Romero has commented that Mexico will refinance the company’s debt since it is a cheaper alternative to the company refinancing by itself in the markets. Yield premiums on Pemex’s dollar bonds are greater than 300bp over Mexico’s dollar bonds given its financial position and lower credit rating – it is rated at B+ by Fitch, four notches below the Mexico sovereign at BBB-. Romero said, “Pemex’s debt is the country’s debt, they go together… The president of the republic has determined that now the bond issuances or refinancings be done by the Finance Ministry according to the financial costs of the sovereign, and this will save the country a lot of money”. However, the finance ministry did not confirm or comment on this. Pemex has the largest debt load of any oil company in the world with $107.4bn in financial debt at the end-March 2023 and has offshore bond maturities of $4.6bn in 2023. With rating agencies sounding warnings over its debt sustainability, its bonds have trended lower recently.
Pemex’s 5.35% 2028s are currently trading at 79.8 cents on the dollar, yielding 11.2%.
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