Petroleos Mexicanos will sell between $700 million and $1 billion in dollar-denominated bonds as part of a government effort to shore up the state oil giant's finances, Deputy Finance Minister Gabriel Yorio said in an interview.
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The issuance is part of a government rescue plan that includes a $3.5 billion cash injection that will be used to pay down obligations and embark on a series of bond buybacks. The deal will result in Pemex's net debt falling by around $3.5 billion, Yorio said.
Pemex, the world's most indebted oil company, plans to sell new debt now to take advantage of the relatively low global interest rates, Yorio said. The U.S. Federal Reserve could start a tapering of asset purchases that could raise borrowing costs.
The debt sale will focus on cost efficiency for the company, Yorio said.
5 billion lifeline to Pemex to Help Finances?
President Andres Manuel Lopez Obrador ordered Pemex to reformulate its five-year business plan, implement financial mechanisms to allow public sector participation in exploration and production projects, and make changes to its management team. Last week, Pemex announced that its former chief financial officer Alberto Velazquezquez Garcia will be replaced by Antonio Lopez Velarde, its risk management chief. Holders of Pemex bonds coming in 2024 to 2030 will receive cash and new notes in an exchange offer, while investors with securities maturing after 2044 will be paid cash for their holdings, according to a statement from Pemex on Monday.
Lopez Obrador has been criticised by investors for allocating more resources to Pemex's unprofitable refineries instead of focusing on its core job of drilling. Industry members are skeptical of the new strategy to develop shallow-water and onshore fields instead of more complex, yet more promising deep-water reservoirs to boost dwindling reserves. None The Fall of a Russian Cyberexecutive Who Went Against the Kremlin