Tuesday, May 21, 2019

Mexico Plans $3.6 Bln Relief for Pemex

February 15, 2019

(Photo: BW Offshore)

Mexico's government will inject $3.6 billion into ailing state-owned oil company Pemex, including by reducing taxes paid, company officials said on Friday, a move aimed at improving the firm's balance sheet and preventing a further downgrade to its credit rating.

Formally known as Petroleos Mexicanos, the firm holds roughly $106 billion in financial debt, the highest of any national oil company in Latin America.

Pemex will receive $1.8 billion in pension liability monetization as part of the new fiscal assistance plan for company, officials said, but the Mexican government will not take on new debt for Pemex.

Mexico's finance minister Carlos Urzua said if Pemex requires more capital injection, the government will provide it. The capital injection will allow debt refinancing over the course of this year, he said.

Rating agency Fitch downgraded debt issued by Pemex by two steps last month, leaving it just barely within its investment grade category.

The move weakened Mexico's peso currency and stoked fears that further downgrades by Fitch or other credit ratings agencies could significantly raise the oil company's financing costs and result in dire fiscal consequences for the government.

Mexico's peso currency was down 0.5 percent against the U.S. dollar on Friday.

(Reporting by Ana Isabel Martinez, Writing by Daina Beth Solomon Editing by Nick Zieminski)

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