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December 19, 2018

Pemex seeks $8bn loan to finance part of its deficit

Mexican state-owned oil producer Petróleos Mexicanos (Pemex) is planning to secure nearly $8bn in loans from banks and export credit agencies (ECAs) to finance part of its deficit next year.

Mexican state-owned oil producer Petróleos Mexicanos (Pemex) is planning to secure nearly $8bn in loans from banks and export credit agencies (ECAs) to finance part of its deficit next year.

Last year, the company raised approximately $9.9bn from international bond markets. However, this time investors are concerned that Mexico’s new administration will obstruct the company’s fiscal situation, reported Reuters.

At the end of September, Pemex raised funds from global bond markets for 75% of its requirements this year, while bank and ECA-backed facilities made up 13%.

While presenting the 2019 budget, Pemex CEO Octavio Romero said that the exploration investment is likely to witness an annual 10% surge over the next six years.

Currently, Pemex has a $1.5bn bank-led revolving credit facility that will mature in the second half of the next year.

“Pemex CEO Octavio Romero said that the exploration investment is likely to witness an annual 10% surge over the next six years.”

The company is working to raise between $1bn and $1.5bn in ECA-backed finance next year, the news agency reported citing three sources familiar with the matter.

The Mexican oil firm has discussed the matter with trade agencies including Export Development Canada and the Netherlands-based Atradius over ECA-backed loans.

In November, Pemex received a $250m ten-year facility from BNP Paribas and HSBC, which was 80% guaranteed by Italian ECA Servizi Assicurativi del Commercio Estero (SACE).

Pemex will have to depend on international bond sales to finance the bulk of its annual deficit, as the bank and ECA-backed loans might not be sufficient to meet its annual deficit.

Mexican President Andrés Manuel López Obrador has promised to offer $23bn for Pemex to boost its crude output to 50%.

The money will be invested to boost plummeting oil production and domestic fuel output.

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