Pemex Plans Debt Refinancing, Greater Output As Path To Healthier..
On by2.5 billion in personal debt this 12 months while attempting to revive oil result to increase income, the firm’s key financial official said, as pressure mounts from ratings agencies over the business’s performance. 2.5 billion includes outstanding bonds mostly. 106.Season 5 billion last, from growing through 2021 and after that the business will seek to cut it, he said. 5.5 billion in credit lines, the company has with banks, already announced by Pemex however, not yet completed.
Besides the domestic and international capital markets, Pemex will explore “bilateral contracts with banking institutions” for the refinancing, even at higher costs after a downgrade by ranking company Fitch previously this month, he said. On Thursday evening after participating in an essential oil industry event Velazquez told Reuters. 80 billion of bonds from investment grade to speculative grade, or “junk,” with a poor outlook.
Many investors expect a second downgrade from Moody’s Investors Service to officially verify Pemex as a rubbish credit. If that occurs, some funds whose mandates prohibit keeping such assets would have to sell their Pemex bonds. Yield spreads on Pemex bonds – indicative of the superior investors demand for holding them rather than safer U.S. Treasuries – have climbed in recent weeks, amid uncertainties about programs by Mexican President Andres Manuel Lopez Obrador to show around a company that was once symbolic of Mexico’s self-reliance.
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Pemex also will likely work out again for a 2020 essential oil hedge to safeguard its export revenue from an urgent drop in price, but changes to a price formula for starting discussions with banks have never yet been finished, Velazquez said. The changes have added to delays in discussions for Pemex and the Finance Ministry’s hedges for 2020, but Pemex desires to protect about 35% of its current production level of almost 1.7 million barrels each day (bpd) with the program.
8.89 billion between 2019 and 2021, Velazquez said, adding that Lopez Obrador’s authorities already released a decree for this adjustment and only additional paperwork is required to complete it. Velazquez said, referring to potential new credit downgrades, but added that Pemex is showing better financial results including benefits in April and could, cost savings from an anti-fuel fraud plan, lower costs for exploration and creation agreements and cuts to expenses. Around the production side, Pemex expects to add some 260,000 bpd of new crude output from 22 shallow water and onshore fields within the next couple of years.
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