CFE to Pay US$1.6 Billion of Debt in 2023

State electric utility CFE reported it faces debt payments of MX$31.64 billion (US$1.6 billion) in 2023. The company’s total debt stands at MX$433.35 billion (US$22.8 billion). 

By the end of September 2022, the state company revealed that it would have to pay MX$43.412 billion (US$2.2 billion) worth of debt payments. Its total debt increased by 22.2% increase in the past 4 years. In 2018, CFE’s balance due amounted to MX$354.625 billion (US$18.7 billion). 

CFE revealed that as a result of rising interest rates, its debt had grown MX$1.3 billion (US$68.6 million) between July and September, 2022, an advance of 4% in comparison to 3Q21. 

CFE has the second largest debt of companies listed on the Mexican Stock Exchange. Nevertheless, analysts believe that the company remains stable as it generates capital flows through different business divisions. It has an adequate liquidity profile, according to Fitch Ratings. Furthermore, experts highlighted that the company has different options to carry out its due payments, including covering a part with its own capital flows or through issuing bonds in local and international markets.

In November 2022, CFE issued four series of bonds in Mexico, each with different terms and rates. For the first issue, the company received MX$3.3 billion (US$174.3 million) at a fixed rate of 6.72% to be paid in a 20-year term. The second portion was worth MX$2.45 billion (US$129.9 million) at a fixed rate of 6.3% with a maturity of 10.3 years. The third was for MX$1.33 billion (US$70.4 million), which will be paid at a nominal fixed rate of 10.82% in 8 years. Finally, the last series accounted for MX$2.90 billion (US$153.6 million) at variable interest plus 48 base points to be paid in 3.5 years.

"CFE’s debt service is clearly manageable. It has a mixed business model featuring a monopoly of [basic supply] electricity production and distribution, which generates profits in real terms, and a key role in the natural gas sector in Mexico" said Gonzalo Monroy, Director General, GMEC. Furthermore, Monroy compared CFE’s case to PEMEX's more precarious debt situation. "CFE can stand alone and meet its commitments while PEMEX is completely dependent on government contributions,” he pointed out. 

In 2022, CFE produced 74% of the electricity consumed in Mexico, covering 99.2% of the population's needs. Likewise, revenues accounted for MX$470.428 billion (US$24.8 billion) in 3Q22, which reflected a 8.2% year-over-year growth. According to Monroy, this is due to the increase in energy sales revenues of MX$39.462 billion (US$2.08 billion) in the industrial, commercial and domestic sectors.

President López Obrador has said that his administration considers it a priority to support state companies PEMEX and CFE so that both can develop healthy finances. In this regard, he announced that the companies’ debts may be transferred to the Ministry of Finance to become part of Mexico’s sovereign debt.