(Bloomberg) – Petroleos Mexicanos SA is offering to buy back some $10 billion worth of its global bonds with cash raised by the Mexican government, according to a statement.
The state-owned driller is looking to repurchase 11 series of notes denominated in euros and dollars due between 2026 and 2029. The Mexican government will seek financing before the offer expires and hand over the proceeds to fund Pemex’s buyback, according to Tuesday’s statement.
The deal is the latest sign of government support for the oil behemoth, which is struggling with around $100 billion of debt. Mexico already sold $12 billion in so-called pre-capitalized securities in July to shore up resources for the company. That transaction earned the junk-rated driller a double-notch upgrade from Fitch Ratings, which cited a stronger relationship with the sovereign for its decision.
Pemex is prioritizing the repurchase of its bonds due in 2026, according to the statement. A successful buyback would reduce the company’s maturity wall for the upcoming year, which stands at roughly $19 billion. Pemex also has around $5.1 billion in bonds maturing in the second half of 2025, and owes roughly $20 billion to its service providers.
It’s “great news for Pemex debt that the government continues to provide massive levels of support,” said Max Wolman, an analyst at Aberdeen Group in London. “There is likely to be ongoing discussions with the government and the rating agencies to guard against a potential downgrade.”
A Pemex spokesman didn’t respond to a request for comment.
See also: Pemex posts first profit in over a year as Mexico finalizes $12 billion debt offering
The company’s dollar bonds due 2050 edged up one cent to around 86 cents as of 12:15 p.m. New York time, according to Trace data.
Mexico last week registered to sell as much as $15 billion in debt in the future, stating the government may come to market “from time to time” after the registration becomes effective, according to a document filed to the Securities and Exchange Commission.
A comprehensive business plan published last month outlines a path for Pemex to become financially self-sufficient by 2027 and attract private partners to boost oil and gas production, which has slumped to around a 15-year low. As part of the plan, Mexico is also raising around $13.3 billion via an investment vehicle with support from local development and commercial banks.
While the recent financing schemes broadly address Pemex’s short term financing needs, analysts are skeptical the plan does enough to address the driller’s operational woes, as the company deals with aging oil fields, a bloated workforce, and a spate of explosions and accidents that have led ESG-minded investors to flee.
See also: Pemex warned of potential oilfield services disruption if debts go unpaid
The company hired BofA Securities Inc., Citigroup Global Markets Inc. and JPMorgan Securities LLC as leads on the transaction, while HSBC Securities Inc., MUFG Securities Americas Inc. and Scotia Capital are also deal managers. The offer will expire on Sept. 30 at 5 p.m. New York time, according to the statement.
