Pemex bonds fall after new issuance plan sends panic on Wall Street

On Wednesday, the state company’s dollar debt was the worst performer in high-yield markets, while bonds due 2041 fell as much as 2.3 cents to 70.63 cents, according to Trace data.

The pullback came after traders considered Pemex’s plan to sell at least $2 billion in new debt, a sum intended to help the company keep up as a spate of writedowns looms.

READ ALSO: Pemex faces US$10 billion in bond payments; Mexico distances itself

“It’s a bit disappointing that they would come, theoretically, without sovereign support,” said Edwin Gutierrez, head of emerging markets sovereign debt at Abrdn.

Although the government has said that it will help Pemex if necessary, it has not yet announced any new measures.

The oil company is under pressure to raise funds for almost $10 billion in debt repayments due this year that it had not considered in its annual budget. The possible sale of bonds would follow the maneuver of last June that was considered a failure due to the weak demand that it had.

Since then, the problems of Pemex they have multiplied. Payments on a debt of about $105 billion are piling up after its output has steadily declined for nearly two decades.

Revenues have also suffered as the company is looking to focus on refining, rather than investing in more lucrative crude exports or new oil discoveries.

READ ALSO: Price of the dollar today in Mexico: how much did the exchange rate open this Thursday, January 26?

Additionally, on Wednesday, SLB, the world’s largest oilfield services provider, said it is owed $1 billion in unpaid invoices in Mexico.

WHAT IS THE ROLE OF PEMEX?

According to the company website, Pemex Its objective is the exploration and extraction of oil and hydrocarbons in Mexico, as well as abroad.

In addition, it provides the service of transportation and storage of hydrocarbons, oil and petrochemicals and other related services, through movement strategies by pipeline and by maritime and land means, as well as the sale of storage and management capacity.

In the same way, it focuses on the activities of refining, transformation, processing, import, export, commercialization, sale to the public, preparation and sale of hydrocarbons, oil products, natural gas and petrochemicals.