When it comes to Mexico’s struggling state oil company, ratings companies and swaps traders are growing further apart.
The latest split surfaced after Petroleos Mexicanos said March 8 it obtained a credit line for up to 15 billion pesos ($845 million) from state banks to make payments to suppliers. Moody’s Investors Service called the plan “credit negative,” while Standard & Poor’s analyst Sebastian Briozzo warned Monday that Pemex’s rating may continue falling.
Nevertheless, the loan is adding to bond-investor optimism that Pemex is on the path to restoring its finances after plunging output and oil prices battered the company and triggered a downgrade. Its five-year credit-default swaps have dropped 9 percent to 344 basis points since March 8, part of a broader decline from a seven-year high in January as the oil producer slashes spending and the government pledges financial support. Pemex’s bond risk may fall to as low as 300 basis points as oil rebounds, said Alejandro Urbina, a money manager at Silva Capital Management LLC.
“We’ve come off the bottom,” he said. “The correction in oil and the government’s recent announcement came pretty close to each other. It’s a two-fisted punch that improves Pemex’s outlook.”
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