Mexico Could Pay Pemex Debt from Stabilization Fund

Friday, March 22, 2019

Mexico's deputy finance minister said on Thursday the government was considering using part of a $15.4 billion public income stabilization fund to pay some debt obligations for heavily leveraged state oil company Pemex.

The finance ministry is working on a new design for the fund to make it counter cyclical, deputy minister Arturo Herrera said in an interview with TV network ADN40, during a banking conference in Acapulco.

Grappling with Pemex's financial health has been a key challenge for President Andres Manuel Lopez Obrador, who took office in December. The entity holds roughly $106 billion in financial debt, the highest amount of any state oil firm in Latin America.

"We'd like to design it as a counter cyclical fund, like the copper funds in Chile are designed, where the resources are used not when the government wants to, but when the economy makes them necessary... In times of abundance, you put money into these resources," he said.

"As a second part of the fund, we'd like to use it to pay some of the debt obligations that Pemex has," he said.

Pemex has some $16 billion of debt payments due by the end of next year. Herrera said Mexico's fund has a generous margin that could be put to helping Pemex.

Herrera said he expected to make an announcement in the next two or three weeks on the plan to use the public income stabilization fund, which holds about 290 billion pesos ($15.4 billion).

Rating agency Fitch downgraded Pemex's credit rating in late January to one level above junk status, citing the company's high leverage and tax burden.

In February, Mexico said it would inject $3.9 billion into Pemex, promising to strengthen its finances and prevent a further credit downgrade. Investors largely saw the plan as only a short-term fix.

Chile has two sovereign wealth funds. Unusual for Latin American countries, they were created to help finance pensions and as a "rainy day fund" for times of economic stress.


($1 = 18.8592 Mexican pesos)

(Reporting by Dave Graham, Stefanie Eschenbacher, Adriana Barrera and Frank Jack Daniel; Writing by Daina Beth Solomon)

Categories: Finance Energy Government

Related Stories

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

Dutch Contractor Completes Malaysia’s Largest 'Rig-to-Reef' Decom Project

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

EnQuest Picks Up Offshore Oil and Gas Block in Brunei

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Petrovietnam, Partners Sign PSC for Block Off Vietnam

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

Current News

PTTEP Acquires Southeast Asia’s Offshore Block from Chevron’s Hess Unit for $450M

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

Pandion Energy Divests Interests in Three Norwegian Assets to Inpex

China Starts Production at Major Oil Field in Bohai Sea

Dutch Contractor Completes Malaysia’s Largest 'Rig-to-Reef' Decom Project

China Rolls Out 17MW Floating Wind Turbine Prototype

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

EnQuest Picks Up Offshore Oil and Gas Block in Brunei

CNOOC Finds Oil and Gas in South China Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com