Mexico’s national oil company will offer to pay back about US $2 billion it owes big-ticket suppliers with new debt, potentially easing conditions for some of its biggest contractors.

In recent years Pemex has been racking up debts to its suppliers, which stood at $13.5 billion at the end of the first quarter, according to its financial filings.

The company did not name which suppliers would benefit from the offer, but said it would exchange invoices for notes with a coupon of 8.75% due in 2029 to suppliers with more than $5 million outstanding.

In January, oil services group Schlumberger said it was experiencing payment delays from its primary customer in Mexico and that it was owed about $500 million. Rival Halliburton also said about 10% of its receivables were from Mexico, where it had also had payment delays.

Schlumberger and Halliburton did not immediately respond to requests for comment.

Pemex has outstanding debt of more than $100 billion, making it one of the world’s most indebted oil companies. Despite recording large quarterly losses, many emerging market funds hold its bonds because of strong government backing and the company’s higher yield compared with Mexico’s sovereign bonds.

The government of nationalist President López Obrador has vowed to “rescue” Pemex after years of privatization, which he has said was aimed at destroying it.

The deal announced on Tuesday covers a total of $2 billion in liabilities, making it neutral to Pemex’s credit profile, said Nymia Almeida, analyst at rating agency Moody’s.

She added that the move was a good step for the company to protect its supplier base.

“Everybody uses suppliers as a source of financing . . . but this amount has increased in the last few years, it’s actually becoming difficult for suppliers themselves to survive,” Almeida said. “I think from that perspective it’s positive that the company is doing something about it.”

López Obrador has made it a priority to support Pemex financially, cutting an important tax rate on its profits to 40% in 2022 from more than 65% in 2019. The company also recently agreed to buy back some bonds and swap others for the amount of more than $3 billion.

At the same time, the government has pursued a strategy of being energy “self-sufficient” that includes spending billions for Pemex to build an oil refinery in the president’s home state. The plan is unlikely to maximize profits for the state-owned company, analysts said, and crude oil production has continued to decline.

© 2022 The Financial Times Ltd. All rights reserved. Please do not copy and paste FT articles and redistribute by email or post to the web.