Mexico City, May 13 (EFE).- Investment banks J.P. Morgan, HSBC and Mizuho Securities showed their confidence Monday in the Mexican government, agreeing to refinance the debt of Petroleos Mexicanos (Pemex) and provide the state-owned oil company with two lines of credit totaling $8 billion.
“It’s being expanded in terms of the amount and we’re talking about an available fund of $8 billion. And the interest rate has also been reduced,” President Andres Manuel Lopez Obrador said during his daily morning press conference at the National Palace.
Accompanied by executives from the three financial firms, the leader of the leftist National Regeneration Movement (Morena) said he was not “taking on debt” for Pemex, which the new administration is committed to rescuing.
The president said the funds would be used, “as they say colloquially, just in case.”
For many years, Pemex has been dealing with a large debt burden, a situation that has been exacerbated by costly labor liabilities and a decline in production.
Foreign Relations Secretary Marcelo Ebrard, for his part, said the refinancing of part of Pemex’s debt and the renewal of two of the oil company’s revolving credit lines was one of the “greatest” transactions in the history of the Mexican state.
Ebrard praised the fact that “three of the largest institutions in the world” handled a transaction that provides a lifeline for Pemex.
The Pemex debt refinancing marks “progress” in the effort to “prop up and accelerate” economic growth in Mexico, Ebrard said.
Finance and Public Credit Secretary Carlos Urzua said a presidential executive order had been signed to reduce the tax burden on Pemex.
“We have milked the cow for a very long time,” Urzua said, referring to the high tax rates Pemex was forced to pay.
Pemex CEO Octavio Romero praised the agreement with London-based HSBC, New York-based J.P. Morgan and Japan’s Mizuho, a deal that was reached after five months of negotiations.
Romero said no other new debt would be taken on, adding that this was one of the main problems affecting Pemex, which went from owing 841 billion pesos $44.077 biillion ) to carrying debt totaling more than 2 trillion pesos ($104.821 billion).
So far, the Lopez Obrador administration, which took office on Dec. 1, has managed to reduce the debt by 18 billion pesos (about $943 million), Romero said.
“This agreement with the international bankers consists of the refinancing of $2.5 billion in debt and the renewal of two revolving lines of credit of $5.5 billion. In both cases, with an extension of three to five years,” the Pemex CEO said.
Nuno Matos de Macedo, head of HSBC Mexico, said the transaction was a “show of confidence” toward “Pemex, Mexico and the current administration,” allowing the state-owned company to improve the “operation and financial structure of Pemex and the energy sector.”
Ahead of the markets’ reaction to the news, Lopez Obrador said the agreement was a response to those who “distort reality” and have been highly critical of the new administration’s plan to rescue Pemex.
“(The fact that) these banks are showing confidence in us is a good message,” the president said.
In February, the administration announced a series of special measures for the oil company that, along with the fight against fuel theft, would add to 107 billion pesos (about $5.6 billion) to Pemex’s coffers.
The administration’s policy toward Pemex was roundly criticized by some specialists and prompted downgrades by credit-rating agencies.
In a report, J.P. Morgan said at the time that it was “disappointed” with the measures, but the company changed course on on Monday by backing the
Lopez Obrador administration with this deal.
Felipe Garcia-Moreno Rodriguez, president and CEO of J.P. Morgan Mexico, noted that “within the bank itself, we have analysts who, like the press, can express opinions on the different issues.”
“We have great confidence in Pemex and the government of Mexico, we believe that … several actions are being taken that are very conducive toward the strengthening of the company, its development and growth prospects,” he said.