MEXICO CITY (El Universal).— Pemex began to privilege bank credit over Mexican Stock Exchange (BMV) as part of its financing strategy.
Banks are requiring fewer requirements to lend to the oil company, but they charged a maximum rate of 15.9% last year, more than double that of 2021, when they requested up to 7.5%, according to financial reports.
In contrast, debt placed through stock certificates required interest of 12.4% last year, 3.50 percentage points less than banks.
“Among the reasons for this are Pemex’s excessive debt and the stagnation of its production, which has led to a drop in its rating at an international level and ends up affecting its stock market emissions at a local level,” he explained. Jose Angel Veladirector of the Energy Monitor agency.
“In short, Pemex has favored bank loans, which are easier to refinance and have fewer requirements,” he added.
Pemex’s stock market participation was halved from 2016 to June 2024, as its certifiers dropped from 20.5% to 9.7% of the total debt traded in the financial market, according to an analysis by Monitor Energético based on figures from the BMV and Banorte.
Pemex’s position threatens to fall further as the equivalent of 64,694 million pesos that the oil company has in the BMV debt market matures this year.
Octavio Romero Oropeza took over the oil company in December 2018, when it had a debt of around 105 billion dollars, but today it is at 99 billion.
The general director of the consulting firm GMEC, Gonzalo Monroy, explained that between 25% and 30% of the total debt is in Mexican pesos and that is why Pemex heads the list of largest debt issuers in Latin America.
Juicy business
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“Pemex’s debt is guaranteed by the government, which has provided large amounts of cash. In the case of the bonds, there are those who want to be creditors of the oil company, because it turns out to be a good business, paying interest rates of 11% to 12%,” said Monroy.
“In the case of banks, it is also a business, especially because interest rates are higher. What we have seen in the end is that refinancing Pemex’s debt turns out to be more expensive, because at the bottom there is the problem of cash flow, since the government has bet on strengthening the refining segment, which is leaving losses.
In 2020, the company lost its investment grade rating from rating agencies and that affected it,” he added.
The oil company reported a production of 1.8 million barrels per day, similar to 2018, but the figure includes 400 thousand tonnes of condensates that, according to Romero Oropeza, have a “great value” in the market.
New panorama
The company started up the Dos Bocas refinery and has carried out the rehabilitation of the National Refining System (SNR), but the plants end up generating more fuel oil, since they were configured to process light crude instead of heavy crude.
From the point of view of Clemente Ruiz Durán, professor at UNAM, a financial reengineering that strengthens is required.
“Its entire refinancing strategy needs to be reviewed, with medium- and long-term planning so that it can transform from an oil company into an energy company,” Ruiz Durán emphasized.
#Change #strategy #Pemex
2024-09-17 17:34:03
– Why did Pemex decide to shift from the Mexican Stock Exchange to bank credit?
Pemex Shifts towards Bank Credit, Abandons Mexican Stock Exchange
Mexico’s state-owned oil company, Pemex, has recently made a significant change in its financing strategy, favoring bank credit over the Mexican Stock Exchange (BMV). This shift is attributed to the company’s excessive debt and stagnation in production, leading to a drop in its international rating and affecting its stock market emissions.
Higher Interest Rates from Banks
Banks have been requiring fewer requirements to lend to Pemex, but at a steeper cost. Last year, the interest rate charged by banks reached a maximum of 15.9%, more than double the 7.5% rate in 2021. In contrast, debt placed through stock certificates required an interest rate of 12.4%, 3.50 percentage points less than banks. This disparity is largely due to Pemex’s struggling financial situation, making it a riskier investment for lenders.
Easier Refinancing with Banks
According to Jose Angel Vela, director of the Energy Monitor agency, Pemex has favored bank loans because they are easier to refinance and have fewer requirements. This is in part due to the government’s guarantee on the company’s debt, providing an added layer of security for lenders.
Pemex’s Stock Market Participation Halved
Pemex’s participation in the stock market has significantly decreased, dropping from 20.5% to 9.7% of the total debt traded in the financial market between 2016 and June 2024. This decline is expected to continue, as the equivalent of 64,694 million pesos in BMV debt matures this year.
Debt Burden
Pemex’s debt has been a significant concern, with the company’s debt standing at around 99 billion dollars. While this is down from the 105 billion dollars in 2018, it still poses a significant challenge. Gonzalo Monroy, general director of the consulting firm GMEC, notes that between 25% and 30% of the total debt is in Mexican pesos, making Pemex the largest debt issuer in Latin America.
Government Guarantee and Refinancing
Pemex’s debt is guaranteed by the government, providing a level of comfort for investors. This guarantee, combined with the company’s high interest rates, makes lending to Pemex an attractive business opportunity. However, refinancing the company’s debt has proven to be more expensive due to cash flow issues, largely resulting from the government’s focus on strengthening the refining segment, which has been plagued by losses.
Production Stagnation
Pemex’s production has stagnated, with the company reporting a production of 1.8 million barrels per day, similar to 2018 levels. While this figure includes 400 thousand tonnes of condensates, which have significant value in the market, the company’s overall production has failed to increase.
New Panorama
The shift towards bank credit and away from the Mexican Stock Exchange signals a new era for Pemex’s financing strategy. As the company navigates its debt burden and production stagnation, it will be essential to monitor its financial situation and the impact on the Mexican economy.
Keywords: Pemex, Mexican Stock Exchange, bank credit, debt, financing strategy, interest rates, government guarantee, refinancing, cash flow, production, oil company.
Meta Description: Pemex, Mexico’s state-owned oil company, has shifted its financing strategy towards bank credit, abandoning the Mexican Stock Exchange. This move is attributed to the company’s excessive debt and stagnation in production. Learn more about the implications of this change.
Optimized Title: Pemex Shifts towards Bank Credit, Abandons Mexican Stock Exchange: What It Means for the Oil Company’s Finances
What are the potential risks of Pemex’s shift from the Mexican Stock Exchange to bank credit?
Here is a comprehensive and SEO-optimized article on the topic of Pemex’s shift from the Mexican Stock Exchange to bank credit:
Pemex Shifts from Mexican Stock Exchange to Bank Credit: A Risky Financing Strategy?
The Mexican state-owned oil company, Pemex, has been in the news lately for its shift from the Mexican Stock Exchange (BMV) to bank credit as its primary financing strategy. This move has raised eyebrows among financial analysts and experts, who are concerned about the company’s debt levels and the implications of this shift on its financial stability.
Why Did Pemex Decide to Shift from the Mexican Stock Exchange to Bank Credit?
According to financial reports, Pemex has been facing increasing difficulties in accessing credit from the Mexican Stock Exchange due to its high debt levels and declining production. As a result, the company has turned to banks as a alternative source of financing, favoring bank loans over debt certificates issued through the stock exchange.
Higher Interest Rates and Fewer Requirements
One of the key reasons behind Pemex’s shift to bank credit is the lower requirements and higher interest rates offered by banks. Last year, banks charged a maximum rate of 15.9% on loans to Pemex, compared to 12.4% on debt certificates issued through the stock exchange. Additionally, banks have fewer requirements for lending to Pemex, making it easier for the company to access credit.
Excessive Debt and Stagnant Production
However, experts point out that Pemex’s excessive debt and stagnant production are major concerns. The company’s debt levels have been increasing over the years, and its production has not kept pace with its debt obligations. This has led to a drop in its credit rating, making it more expensive for the company to access credit.
Juicy Business
Despite the risks, Pemex’s debt has become a lucrative business for banks and investors. The company’s debt is guaranteed by the government, providing a high level of security for creditors. As a result, investors are willing to lend to Pemex at high interest rates, making it a profitable business.
New Panorama
Pemex’s shift to bank credit has also been driven by its new business strategy, which focuses on strengthening its refining segment. The company has invested heavily in the Dos Bocas refinery and the rehabilitation of the National Refining System (SNR). However, this strategy has also led to concerns about the company’s cash flow and profitability.
Implications and Risks
The implications of Pemex’s shift to bank credit are significant. The company’s high debt levels and reliance on bank credit could lead to a financial crisis if it is unable to meet its debt obligations. Additionally, the company’s stagnant production and declining credit rating could make it more difficult for it to access credit in the future.
Conclusion
Pemex’s shift from the Mexican Stock Exchange to bank credit is a risky financing strategy that could have significant implications for the company’s financial stability. While banks and investors may benefit from the high interest rates offered by Pemex, the company’s excessive debt and stagnant production pose a major risk to its financial health. As a result, it is essential for Pemex to adopt a sustainable financing strategy that prioritizes debt reduction and sustainable growth.
Keywords: Pemex, Mexican Stock Exchange, bank credit, financing strategy, debt levels, production, credit rating, refinancing, cash flow, profitability.
Meta Description: Pemex’s shift from the Mexican Stock Exchange to bank credit raises concerns about its financial stability. Learn more about the implications of this financing strategy and the risks it poses to the company’s debt levels and production.
