Monday, January 17

They will inject 3,500 million dollars into Pemex to reduce debt

The Secretary of Finance announced that as part of the support strategy in favor of the sustainability of Pemex The Federal Government will make a new capital contribution for up to 3.5 billion dollars, which was criticized by specialists, since they considered that these actions could have an impact on public finances.

He specified that with the transaction, the SHCP and Pemex will be able to reduce the amount of the oil company’s foreign market debt and improve its maturity profile by extending its short- and medium-term repayments.

The Treasury indicated that on the way to the second half of the administration, coordination between the Treasury and Pemex will intensify with the aim of improving the company’s financial position.

Thus, it is contemplated to reformulate the business plan to include the necessary actions to strengthen the financial position of Pemex and financial mechanisms and structures will be implemented that allow the public sector to co-invest in exploration projects and extraction to ensure the availability of a robust production platform; and, that allow to improve the debt structure of the company.

He stressed that support for Pemex does not compromise the sustainability of public finances, nor the resources for strategic and social programs.

They criticize injection

For Héctor Villarreal, general director of the Center for Economic and Budgetary Research (CIEP)The justifications given by the Treasury to support Pemex leave much to be desired, and it is striking that the economic rescue is carried out unilaterally, they are not asking Pemex for anything in return.

Gabriela Siller, director of economic and financial analysis at Banco Base, said that with these types of actions, the oil company is seen as a bottomless barrel for public finances and for the Mexican economy, and the fact that it needs financial support is because it is not profitable.

Juan Musi, economic analyst and partner at Alpha Patrimonial, pointed out that Pemex is a company that is in a situation of bankruptcy, but what the rating agencies are seeing locally and globally, is that with the contribution of the 3.5 billion dollars the government’s guarantee is maintained, which gives the providers confidence to continue lending and investors to continue buying their bonds.

However, he warned that the rescue of Pemex with the millionaire contributions of the government it could end violating public finances. “It is a way of masking the numbers and making Pemex’s balance sheet and financial situation look better, even though the balance of the federal government and the situation of public finances deteriorate. At the end of the day, taking money out of the government bag should have an impact on their finances, ”he stressed.

For Joel Virgen, chief economist at Out of the Box Economics, the fact that the resources to support Pemex do not imply public spending does not imply that the opportunity cost of using these liquidity resources is zero, since they may exist better and more profitable options in its use.

“For the rating agencies, Pemex continues to be a contingent liability for the Federal Government and therefore a risk for the sovereign profile.”

Standard & Poor’s considered that while such support is insufficient to fully address Pemex’s funding needs and business challenges, it is in line with the government’s history of support, a key rating factor for the company. “Although the sovereign does not guarantee Pemex’s debt, we maintain our assessment that there is an almost certain probability of government support if the company faces financial difficulties,” he said.