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Bond Market News
Pemex’s Dollar Bonds Move Lower; Shuts Down Mexico’s Largest Oil-Exporting Terminal
August 2, 2023
Pemex’s dollar bonds fell 2-4% after it shut down Mexico’s largest oil-exporting terminal on Sunday due to a leak in one of its hose trains. This adds to the list of major operational woes Pemex has faced recently – this includes a gas platform explosion that killed two people and the shutting down of another terminal after strong winds blew off hoses that were loading a ship. This incident occurred during a period where Pemex usually boosts oil sales to the US to meet heightened demand for crude due to the summer driving season. The company is currently experiencing a backlog of seven ships waiting to load 8mn barrels of oil for clients in the US, South Korea, China and India, which it plans to handle by reactivating a floating platform. Last week, rating agencies sounded warnings over Pemex’s debt sustainability as the company had accumulated $107bn in debt and has to make roughly $15bn in offshore bond payments in 2023 and 2024 on top of an additional $9bn from other short-dated debt. However, the Mexican government has pledged to refinance the company’s debt, with the latter receiving approximately $3.8bn to meet its obligations.
Pemex’s bonds have fallen by roughly 2-4%. In particular, its 7.69% 2050s fell 3.8% and are currently trading at 67.1 cents on the dollar, yielding 11.8%.
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