EM LATAM CREDIT: PEMEX 2030 Plan
Petroleos Mexicanos (PEMEX; B3neg/BBB/B+)
PEMEX 2030 Plan
Neutral for spreads
• PEMEX 2050 bonds have traded in a spread range of T+532-588 bps in the past three months, last at T+582, 10.66% ytm with the spread to the MEX sovereign ranging from 326 – 365bps, last 365bps. Overall neutral for spreads with bad news already priced in and nothing here suggests improvement.
• Investment plans up to year 2030 include MXN220bn for oil exploration, MXN238bn for gas exploration, MXN20bn for petrochemicals and MXN8bn for fertilizer. Security measures will be improved to prevent fuel theft. Pemex will work with the government on supplier / bond payments. Pemex will rehabilitate six refineries for MXN105bn.
• Capital investment is good if it ultimately leads to an improvement in oil and gas production, which lately has been disappointing. For refining, Dos Bocas was a huge investment with a cost of USD19bn but production has been disappointing. We have been hearing about government support to pay past suppliers but still no concrete details.