Mexico's $5 billion rescue package to pay down debt at Pemex [PEMX.UL] is a...
MEXICO CITY - Mexico’s $5 billion rescue package to pay down debt at Pemex [PEMX.UL] is a one-of-a-kind transaction that should give the struggling state oil company breathing space to focus on output and costs, Deputy Finance Minister Gabriel Yorio said.
The step, announced earlier on Wednesday, was the latest by President Andres Manuel Lopez Obrador to plot a brighter future for the cash-strapped, debt-laden oil and gas producer after years of declining output. To stave off a possible Pemex downgrade, the Mexican government has given Pemex several tax breaks and cash support this year, and has budgeted for another $4.4 billion of similar support in 2020. The government is expected to continue providing extra cash to the company for several more years.
“This is the last piece of support that we are planning to give to Pemex from the point of view of the 2019 fiscal year.”The company said in its announcement of the package on Wednesday that it will issue new bonds in maturities of seven, 10 and 30 years to refinance short-term debt, although it did not give a value for the new bond placements.
“We think is will be a transaction with enough volume that we can eliminate the company’s credit risk in the short term,” Yorio said.
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