Pemex may miss bond market window
January 31, 2019 |
Mexico's state-owned oil company faces higher concessions after Fitch downgrades it to one step above junk
Mexico's Pemex appears to have missed an opportunity to issue a benchmark bond before the pre-earnings quiet period begins in mid-February, LatinFinance has heard.
"We have not heard of a mandate yet," said a debt capital markets banker interested in leading the deal. "I think they have missed the window of opportunity. If they were to issue now, they would have to pay 15bp to 25bp in concessions over current trading levels."
Yields on Pemex's 2027 notes rose as much as 40bp to around 7.5% on Wednesday after Fitch Ratings downgraded the state-owned oil company to one step above junk status.
The ratings agency cut Pemex to BBB- from BBB+ and kept its negative outlook, saying the government's plans to support the oil company are not enough to improve its credit profile.
President Andrés Manuel López Obrador countered by saying that Pemex is in the best shape of the past 30 years and added that the government has increased the oil company's budget by 25%.
"It's really hypocritical of these organizations that allowed the looting, that endorsed the so-called energy reform. They knew that foreign investment was not coming and that investments in Pemex were not increasing, and that it resulted in a drop in production, but they never said anything," AMLO said at a press conference
The AMLO administration has said it will give Pemex a capital injection of MXN25bn ($1.31bn) and lower the company's tax load by MXN11bn per year to increase investments and boost production.
Pemex had been expected to follow the government to the cross-border bond market this month, but it has since asked banks to pitch a new revolving credit facility for $1.5bn.