PEMEX in Talks with JP Morgan, Goldman Sachs Regarding Financing

PEMEX is in talks with JP Morgan and Goldman Sachs to refinance about US$1 billion of its debt, although the final amount could be higher.

According to sources consulted by Bloomberg, the NOC seeks to find some liquidity by refinancing its debt with JP Morgan, backed up by its gasoline sales, and with Goldman, guaranteed via its crude oil production. Similarly, PEMEX has reportedly been negotiating with HSBC and Goldman to get financing linked to its emission reduction plan.

As previously reported by MBN, the oil company explored different options to refinance its debt. Despite its plight to fulfill its financial obligations, the government has backed up the NOC’s decisions by stating that if necessary, it will receive federal aid. Although no mechanism has been set in place, PEMEX contributed only MX$137 million (US$7.4 million) to the Treasury for Hydrocarbon Exploration Rights in January 2023 and did not provide any funds to the Shared Profit Rights and Hydrocarbon Extraction Rights categories. What it did contribute represented 0.38% of what PEMEX contributed in December.

PEMEX has received financial support amounting to US$45 billion in capitalizations, direct transfers, tax exemptions and other contributions during this administration. However, analysts said it looks less likely the NOC will receive direct funding this time around.

As part of PEMEX’s attempts to gain liquidity, the company placed US$2 billion in bonds on the stock market. This move was widely criticized as it featured a high 10.275% return rate based on the risk it represents. Credit ranking firms such as Moody’s, Fitch Ratings and S&P agreed that the NOC’s placement and further intentions to finance its debt will have to be heavily backed up by federal support.

The administration’s strategy for PEMEX had been previously qualified as deficient by Moody’s since the indebted company’s refining focus had cost it more losses. However, the government stands firm in its decision to strengthen the state company, which has led to an ongoing USMCA energy dispute over the alleged unfair treatment of private companies and protectionist market policies.

PEMEX remains Mexico’s most relevant oil and gas producer by a landslide despite its declining production, economic losses and problematic debt. Since the beginning of the administration, many doors were closed for private operators to contribute to national production, as no further bidding rounds have been granted during this administration toward further exploration.