Pemex Lines Up Goldman, JPMorgan for $1B in Financing

Petroleos Mexicanos is negotiating with Goldman Sachs Group Inc. and JPMorgan Chase & Co. for at least $1 billion in financing as the debt-laden and loss-making oil major scrambles for cash amid sinking production.

Pemex is in talks with Goldman Sachs for financing guaranteed by its crude, and with JPMorgan for funding linked to its gasoline sales in Mexico, according to people familiar with the transactions. The two deals this year could raise significantly more than $1 billion, said the people, who asked for anonymity as they are not authorized to discuss the private talks.  

Representatives of Pemex and the Finance Ministry didn’t respond to a request for comment. Goldman Sachs and JPMorgan declined to comment.

The plan to offer collateralized debt is indicative of the liquidity crunch faced by the world’s most indebted oil driller. It comes after Pemex issued $2 billion in 10-year bonds in January that were among the most expensive new debt of the year. While the high cost can be partially explained by current global credit conditions, the fact that the driller tapped international capital markets at all underscores its troubles.

The company has $105 billion in outstanding debt, with about $8 billion coming due this year, Moody’s Investors Service said in a Jan. 31 note. Its bonds due in 2033 fell to 96.15 cents on the dollar Tuesday from 96.86 cents on Friday, according to Trace prices.

Pemex has been asking banks since last year for innovative solutions to help manage its mountain of debt. Bloomberg previously reported Pemex has been in talks with Goldman Sachs and HSBC Holdings Plc for financing linked to reducing greenhouse gas emissions.

Crude production has been declining for more than a decade and a half and the company reported a loss in the third quarter even as global peers amass billions of dollars of profits. Pemex has focused on expanding its refining capacity as part of a government bid to make Mexico self-sufficient in fuel generation, detracting from its core job of drilling.

President Andres Manuel Lopez Obrador has said that the Finance Ministry will help Pemex should it be unable to pay its debt. But the government would prefer Pemex cover its own debt amortizations as it faces budgetary restrictions. It has already provided Pemex with about $45 billion in tax breaks, capitalizations and other financing since 2019. 

--With assistance from Maya Averbuch.