Mexico announces debt sales to strengthen Pemex's struggling finances

The Mexican finance ministry announced a new operation Tuesday to strengthen the finances of Petroleos Mexicanos, the heavily indebted energy company owned by the government.

The ministry stated in a press release that the operation will consist of issuing pre-capitalized note financing instruments, but the operation won't constitute a guarantee to the company.

The statement from the ministry did not mention how much money Pemex hoped to raise through this sale.

Bloomberg News had reported earlier on Tuesday that, citing anonymous sources, the government hoped to raise between $7 and $10 billion through the sale.

Pemex is the most indebted company in the world. It has a debt of $20 billion with a long list of suppliers and subcontractors, on top of another $101 billion in financial debt. This is despite billions of dollars in government funding in the past few years for amortizations.

Pemex's dollar international bonds rose on Tuesday, after the government announced its debt operation.

Pemex bonds increased across the curve. The 2050 issue was up 2.6 cents, at 80.65 cents per dollar. The majority of maturities between 2027-2031 increased by over one cent. Reporting by Kylie Madry, Brendan O'Boyle and Rodrigo Campos. Additional reporting by Daniel Wallis.

(source: Reuters)