The Mexican government’s draft budget for next year includes a capital allocation to Petroleos Mexicanos to pay maturing debts that have surpassed $11 billion, according to people with knowledge of the matter.
(Bloomberg) — The Mexican government’s draft budget for next year includes a capital allocation to Petroleos Mexicanos to pay maturing debts that have surpassed $11 billion, according to people with knowledge of the matter.
The inclusion of Pemex’s maturing debt in the budget is a bid to ease concerns in the market about the management of the oil company’s finances, one of the people said. The finance ministry will present the draft budget on Friday.
Pemex has some $11.2 billion in debt amortizations for 2024, according to a company presentation at the end of June. In a sign of investor concern over the debt, the spread Pemex has paid on its 10-year notes over comparable dollar debt issued by Mexico has blown out to more than 5 percentage points this year from around 1.2 percentage point prior to 2019, according to data compiled by Bloomberg.
Representatives from Pemex and the Finance Ministry didn’t respond to a request for comment.
The capital allocation is the latest measure to bail out the heavily indebted state driller, whose finances have worsened amid a significant long-term decline in crude production and mismanagement of its refineries. In July, the Finance Ministry gave Pemex a capital injection of about $4 billion and it has deferred the company’s profit-sharing duty (DUC) payments, which has been slashed to 40% in recent years. Pemex’s debt is the highest of any major oil company, reaching $110.5 billion by the end of June.
READ MORE: Pemex Profits Fall Amid $4 Billion Government Injection
–With assistance from Maya Averbuch.
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