Last week’s announcement that the federal government promised to cover the debt of Petróleos Mexicanos (Pemex) caused strong volatility in the price of the bonds of the Mexican state oil company.
Even with this, it maintained an increase of 1.14% until this Thursday, to 97.91 dollars from the 96.81 dollars per paper that it registered on October 26, a day before the head of Pemex, Octavio Romero Oropeza, declared it.
Specialists consulted explained that at first the news was welcomed by investors, which was reflected in the peak that reached the price of bonds with a 10-year maturity on Thursday, October 28, one day after the news.
However, as of this month the price has varied between $ 97.41 and $ 97.91.
“The moment the government gives the news of the support for Pemex’s debt, investors take it positively, this causes the price of their bonds to rise. But after a few days, as there is no more specific plan for that help, they started going out and selling short, ”commented Heriberto Sandoval, an independent investment advisor.
As long as there is no clearer and more viable support on how the explicit support of the government will be and how long it will last, the volatility in the price will continue. Even in the medium and long term the price of the bonds would tend to fall ”, he added.
Víctor Gómez Ayala, professor at the Autonomous Technological Institute of Mexico (ITAM), explained that the behavior of Pemex bonds obeys many conditions. The announcements of the federal government in terms of the support of Pemex is a very important part, but also the company’s own results and the appetite for risk at a global level.
He pointed out that although there was already implicit support from the federal government for Pemex’s debt, investors have concerns about the financial fragility of the energy company. One of these is whether you will have the ability to pay your liabilities on your own.
“The federal government has been throughout this administration giving explicit support to the company. One of the most recent is the reduction of its approved tax burden to 40% (from the current 54%) for next year, adding to the capitalizations that have been made by the budgets of each year ”, explained Gómez Ayala.
Face pressures
Petróleos Mexicanos is the most indebted oil company in the world, its cost liabilities total 115,000 million dollars and a good proportion have maturities after 2030.
The amortizations of November and December of this year comprise 1,418 million dollars. By 2022 it will have to pay around $ 6.1 billion.
In 2023, Pemex will face another $ 7.3 billion and another $ 9.1 billion by 2024, according to data from the oil company itself.
Víctor Gómez explains that the fragility of the company was also reflected in its results for the third quarter of the year, since it reported a loss of just over 77,000 million pesos, although something is explained by the exchange loss.
“It is difficult to isolate from the market reaction as a whole which factors dominate over others in the behavior of bonds,” said the professor. Although he clarified that “the market reaction this week does not fully confirm that it is an entirely positive announcement, since it is not clear how far this help will go.”
The academic indicated that although there is no clear plan on this aid, the truth is that the current administration’s bet is that it will eventually translate into greater production and, derived from the oil income, there will be greater fiscal resources for the government. federal in the coming years.
The goal is that at the end of this administration, Pemex will produce 2 million barrels per day. At the end of the third quarter of this year, the level stood at 1 million 761,000 barrels. The issue is that Pemex’s operating conditions make it difficult for it to produce favorable financial results.
Reference-www.eleconomista.com.mx