Pe­mex’s NYC road­show spooks in­vestors

Viet Nam News - - MARKETS -

MEX­ICO CITY — Yields on the debt of Mex­i­can state- run oil com­pany Pe­mex rose sharply last week after the com­pany failed dur­ing pre­sen­ta­tions in New York to lay out a clear plan to re­duce debt and in­crease out­put, an­a­lysts said.

Pe­mex faces the pos­si­bil­ity of a credit rat­ings down­grade due to costly pro­pos­als by the new gov­ern­ment of left­ist Pres­i­dent An­dres Manuel Lopez Obrador that in­clude plans to build a new re­fin­ery and up­grade ex­ist­ing ones.

Half a dozen in­vestors and an­a­lysts who ei­ther at­tended or were briefed on pre­sen­ta­tions in New York by the com­pany’s new chief fi­nan­cial of­fi­cer, Al­berto Ve­lazquez, said they were un­con­vinced by the plan to turn around Pe­mex.

Mex­i­can fi­nan­cial as­sets slumped late last year after Lopez Obrador can­celled a partly-built air­port project. They have re­gained ground in re­cent weeks, in part due to re­lief about an aus­tere bud­get an­nounced by his eco­nomic team.

Mar­kets are watch­ing closely for signs of how the new pres­i­dent will man­age Latin Amer­ica’s sec- ond largest econ­omy.

“It was a poor pre­sen­ta­tion and it is at a time when the mar­ket is in­creas­ingly sen­si­tive about any­thing to do with Mex­ico,” Pablo Cisilino, a port­fo­lio man­ager at Stone Har­bor, told cap­i­tal mar­kets pub­li­ca­tion Refini­tiv IFR.

Pe­mex did not im­me­di­ately re­spond for a re­quest for com­ment.

The yield on Pe­mex’s 6.5 per cent coupon dol­lar bond due Jan­uary 2029 spiked on Thurs­day and Fri­day, clos­ing 35 ba­sis points higher on Fri­day com­pared to Wed­nes­day’s close, ac­cord­ing to Refini­tiv data.

Both Pe­mex and the gov­ern­ment were ex­pected to try soon to is­sue debt on in­ter­na­tional mar­kets, and the two-day road show launched on Wed­nes­day by Ve­lazquez and of­fi­cials from Mex­ico’s fi­nance min­istry was a bid to ease wor­ries.

“It back­fired,” said one New York an­a­lyst, who spoke on con­di­tion of anonymity.

Petroleos Mex­i­canos, as the firm is for­mally known, has seen crude out­put drop for more than a decade as its ma­jor fields age and it has strug­gled to re­plen­ish re­serves. — REUTERS

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