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Bond Market News
Pemex’s Dollar Bonds Rise on Comments About Government Support on Debt
July 28, 2023
Some of Pemex’s dollar bonds ticked higher by up to 2% after its CEO Octavio Romero commented that Mexico will refinance the company’s debt. He cited that it would be economically prudent that the government would refinance the state-owned company’s debt since it is a cheaper alternative to Pemex refinancing by itself in the markets. While the finance ministry did not comment, Mexican President AMLO on Thursday said, “Pemex isn’t a private company. It’s connected to the nation”. To further soothe nerves, he said that Pemex should not have to pay more than Mexico to issue debt, adding they are “the same”. It is to be noted that Pemex is rated at B+ by Fitch, four notches below the Mexico sovereign at BBB-. George Ordonez, a strategist at BBVA noted, “They said the magic words. All the government had to do was come out and say ‘we’re taking care of near-term maturities’.” Analysts at JPMorgan and BofA reiterated their overweight recommendations on Pemex’s debt due to expected state support.
Its 6.875% 2025 jumped 1.5 points to 96.29, yielding 8.75%.
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