June 2, 2020

Mexico capitalizes the indebted Pemex with 5,000 million dollars

The Government of Mexico announced on Wednesday a capitalization to Petróleos Mexicanos (Pemex) for 5,000 million dollars to provide the state with greater financial stability.

"The Ministry of Finance and Public Credit (SCHP) announces that the Government of Mexico will make a capital contribution for an amount in national currency equivalent to 5,000 million dollars to Petróleos Mexicanos (Pemex)," Hacienda said in a statement.

The ministry explained that this action is part of the Government's "efforts" to strengthen Pemex's financial stability and "improve its long-term profitability and strategic contribution" to the Mexican economy.

"The capital contribution will be funded with the financial assets deposited in the Federal Treasury. Pemex will use these funds to reduce its indebtedness accompanied by measures that the company will announce shortly to reduce debt and manage its maturity profile," the ministry said.

He said that said capital contribution will not have "impact on the net debt" of the public sector in Mexico.

In this way, the official commitment of "fiscal discipline and macroeconomic stability supported by the formulation of prudent policies" is reaffirmed, said Finance, confident that this action "will strengthen the company."

In a newsletter published simultaneously, Pemex announced the "capitalization" of the federal government for 5,000 million dollars and intended "to reduce the balance of the company's debt."

Additionally, he explained that this September 11 an operation was carried out in international markets that includes both the injection of 5,000 million dollars from the Mexican Government and a new issuance of seven, ten and thirty years to refinance the short-term debt .

"Finally, an exchange of bonds to provide additional support for the maturities of the short, intermediate and long part of the curve, in order to soften the maturity profile," Pemex said.

It is anticipated that this operation will have the participation of investors from the United States, Europe, Asia and Mexico. The placing agents of this instrument are Goldman Sachs, J.P. Morgan, Citi, HSBC, Mizuho, ​​Crédit Agricole and Bank of America, concluded the bulletin.

Pemex has a financial debt of more than 106,000 million dollars and another 64,000 million committed in workers' pensions, being one of the most indebted oil companies in the world.

López Obrador, who assumed power on December 1, 2018, has pledged to rescue Pemex from his debt crisis and achieve energy self-sufficiency in the country.

Therefore, the Mexican Government presented on July 16 the Pemex Business Plan, which through a reduction of up to 11% of the tax burden and a multi-million dollar investment seeks to refloat the oil company.

In the draft budget for 2020, Pemex is expected to receive 86,000 million pesos (about 4,407 million dollars).

. (tagsToTranslate) Mexico (t) capitalizes (t) indebted (t) Pemex (t) millions

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