The signing ceremony at this morning's presidential press conference.Three banks have reached an agreement with the federal government to underwrite a US $8-billion syndicated loan for Pemex, Mexico’s heavily indebted state oil company.
President López Obrador signed agreements with HSBC, JPMorgan and Mizuho Securities at his daily press conference this morning, stating that the banks’ commitment was evidence of their confidence in the Mexican economy and Pemex, which has debt of US $106.5 billion.
The loan – the largest amount ever borrowed by Pemex – is designed to allow the company to refinance its debt.
Both the president and Pemex CEO Octavio Romero stressed that it doesn’t represent new debt for the state oil company.
The latter said that the credit took five months to negotiate and explained that the deal will enable Pemex to refinance US $2.5 billion in debt as well as renew two revolving lines of credit for up to $5.5 billion over a period of three to five years.
“With this renegotiation, we are not taking on additional debt for Pemex,” Romero said.
Today’s announcement comes three months after the government presented a 107-billion-peso (US $5.5-billion) rescue package to reduce the company’s financial burden and strengthen its capacity to invest in exploration and production.
The three banks said they hoped Mexican and international banks would participate in the syndication process for the loan.
The CEO of HSBC México said the loan “showed the confidence HSBC has in Pemex, in Mexico and the current administration.”
Nuno Matos de Macedo added that the credit would give the state oil company more stability and flexibility in the allocation of resources.
The type of credit to be extended to Pemex is typically charged the London Inter-Bank Offered Rate, or Libor, plus 2.35%, or around 4.85% in total, according to the CEO of JPMorgan México.
“Below 5% for this type of instrument is very attractive,” Felipe García Moreno said.
Increasing Pemex’s oil production and refining capacity in order to reduce reliance on imports and eventually make Mexico self-sustainable with regard to its fuel needs is a priority for the federal government.
President López Obrador is forging ahead with plans for a US $8-billion refinery on the Tabasco coast, announcing last week that Pemex and the Secretariat of Energy (Sener) will build the project because the bids offered by private companies were too high and their estimated completion dates went beyond the three-year period requested by the government.
Business groups, analysts and others spoke out against the plan, stating that the state oil company and Sener don’t have the technical capacity to carry out the refinery project.
However, López Obrador remains optimistic that the government’s strategy for the company will yield positive results.
He said today that the fight against fuel theft was working and that Pemex should save 50 billion pesos (US $2.6 billion) this year.
Source: Milenio (sp), Financial Times (en)
