Bottomless barrel? Debt, the risk that persecutes Pemex

Although it is a technically bankrupt company, Pemex does not yet have any kind of project for finance your debt, what exceeded 110 billion dollars to the third quarter of 2020, placing it as the world’s most indebted oil company.

In accordance with Carlos González, director of economic analysis at Monex, Pemex is at risk since the rating agencies determined that your bonds are junk. However, it stated that since it is supported by the government, it can still carry out operations on the stock market to help it finance itself.

“The company is technically bankrupt. The only thing that makes it viable is the implicit support from the government not to let it fail. The company has continued to ‘kick’ the debt, the markets have assigned it a price of a bankrupt company, the rating agencies determine that its bonds are junk, but it is a company supported by the government, for which can still go to the markets”Stated González.

However, the specialist warned that if Pemex’s debt is assumed by the government, would impact public finances and it would generate a downgrade in the sovereign risk rating.

Other specialists point out that Pemex has several ways to survive. On the one hand, that the government assumes the company’s debt and inject capital with remnants of the Bank of Mexico (Banxico) for 300 billion pesos.

The remnants are money that is generated from reserves, as a result of a capital gain when there is devaluation, but they are not as such the central bank reserves.

However, “if you don’t make fiscal changes and you don’t give it resources so that there is exploration and production of crude oil, which is where the truly profitable is, in crude oil, you don’t get anywhere, it’s a bottomless barrel,” he agreed. Ernesto O’Farrill, president of the Bursamétrica consulting.

In turn, other analysts put on the table a third alternative, which consists of create a Petrobonos issuance program of up to 10 billion dollars labeling the resources for exploration and production assigned to the national oil company, and which for this year alone amounted to 298 billion pesos.

Finally, and according to O’Farrill, the last alternative would be to separate the oil company’s businesses between those that are profitable and those that are not.

“About the profitable group, make a new business plan with good management. This would allow Pemex to go public to issue capital ”, he commented; the other group would be made up of pension contingencies and refineries, areas for which financing alternatives would have to be sought.

Susana Cazorla, partner at SICEnrgy, He stressed that the government should focus on alternatives to make Pemex profitable, because “instead of focusing on what makes it more profitable, they focus on activities such as refining, where it loses money,” he said.

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