As the biggest companies and government finance companies in Mexico at relatively low cost, the state oil company Pemex had to resort to nearly record-high returns in order to attract investors once a lover of bond markets.
Such gap, as shown by recent bond bids, will not soon deteriorate and could further harm the finances of the group, as analysts said.
As the credit rating agency Fitch lowered its score to junk status in June, Pemex, officially known since Petroleos Mexicanos, has been under increased pressure. Whether Moody’s or S&P follows suit, it will cause Pemex bonds worth billions of dollars to be forced to sell.
In September, PEMEX issued 10-year bonds with a maturity of 6.85%, denominated in dollars = 71654 QCT7, which reached a record rate in 2016 of 6.9%.
When yields rise from Pemex, many big Mexican companies benefit from cheaper funding in the face of fluctuating worldwide dollar liquidity.
The 10-year bond with a maturity return of 4,17% was offered two weeks before the bond placement of Pemex by Industries Peñolos PEOLES.TMX, one of the biggest gold producers in Latin America. 456472AB6= and the petrochemical giant Alpek ALPEKA.MX issued 4.29% 020564AD2= bonds.
In April, America Movil AMXL.MX, the telecommunications conglomerate owned by the family of billionaire Carlos Slim, released 10-year bonds at 3.71 percent 02364WBH7=.
Through Pemex’s financial statements, higher borrowing costs can also be seen. The interest is paid on the debt rose 22% year-on-year from January to September to $5.228 billion.
The state-owned oil company suffered almost $9 billion in losses. During that same period.
The average yield of 10-year bonds sold by State oil companies this year, including Petrobras of Brazil, Ecopetrol of Colombia, Saudi-Arabia’s Saudi Aramco and Italy’s ENI is 5.5%, according to the data from Refinitiv Eikon, about 132 basis points below Pemex yields of 6.85%.