Mexico’s Pemex expects its total debt to rise above $100 billion in 2016, as the state-run company plans to issue more debt amid the oil price plunge and ongoing production declines.
According to an investor presentation, the company estimates it will borrow $21 billion next year. As much as $20 will be earmarked for national and international debt issuance and a reduction in bank loans. Pemex plans debt payments of $5.3 billion in 2016. This means the existing $87 billion in debt would grow by approximately $15.7 billion.
Pemex CEO Emilio Lozoya
The company reported a record 3Q15 loss of $10.2 billion, amid oil production on a trajectory toward an eleventh consecutive year of declines. Moody’s downgraded Pemex on November 24. Mauro Leos, senior analysts with Moody’s, was quoted by Bloomberg as saying in a research note that the company’s “credit metrics will deteriorate further, and its financial leverage will remain high as its capital spending needs continue to be financed with debt in the context of low oil prices and declining production.”
Pemex says it plans to improve its financial position via joint ventures with oil companies to boost output at mature fields and with changes to its pension structure, which received approval in November.
Moody’s also said the company will also probably consider the sale of additional assets in 2016 in order to free up capital. Pemex sold a 50% stake in Gasoductos de Chihuahua for $1.3 billion in July.