Mexico giving ‘complete support’ to Pemex, has plan for 2023 debt payments

(Reuters) – Mexico’s government will provide further support to state-run oil company Petroleos Mexicanos (Pemex) and has a plan to ensure that pending bond payments in 2023 are met, President Andres Manuel Lopez Obrador said on Friday.

Pemex’s debt obligations are being paid on time with the government’s assistance, and the finance ministry and Pemex’s leadership are working out the schedule for this year’s payments, Lopez Obrador said at a news conference.

“They have, I repeat, a plan to cover debts for this year,” the president told reporters, adding that the ministry is offering “complete support” for Pemex.

Mexico would continue to reduce the tax burden on Pemex, alongside other measures, Lopez Obrador said, noting that the ministry would explain soon how debt payments would be met.

“Helping with the transfer of Pemex debts to sovereign debt – finance ministry debt – is another important practice,” he said, explaining that this helped reduce borrowing costs.

Pemex’s debt payments due for the first quarter of 2023 stand between $5.5 billion and $6 billion, the firm’s Chief Executive Octavio Romero said earlier this month.

The heavily-indebted company has received tax breaks and capital injections in the past, thanks to support from Lopez Obrador, a left-leaning resource nationalist.

Several Pemex bonds traded up on Friday, including one maturing in 2048 that gained 1.5 cents to 67.2, and a 2046 issue that advanced by 2.5 cents to 65.3 cents on the dollar.

Meanwhile spreads on Mexican government debt against U.S. Treasuries (.JPMEGDMEXR) this week touched their tightest level in nine months.

Lopez Obrador said there was no precise figure yet on how much additional support Pemex would require, but he indicated that the government would operate within the limits that Congress had authorized for the 2023 Mexican budget.

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