We maintain our Overweight recommendation on Pemex, supported by Mexico’s extraordinary demonstration of support, which effectively transfers the company’s refinancing burden onto the sovereign balance sheet. The sovereign raised about $13.8 billion across dollar and euro bonds to finance Pemex’s $9.9 billion tender and near-term maturities. Mexico also executed a landmark $12 billion pre-capitalized securities (P-Caps) transaction for Pemex. In parallel, authorities launched a P$250 billion (roughly $13.5 billion) investment fund to back projects and supplier payments, while the Finance Ministry signaled a near-$14 billion budget line for the company. Management also communicated expectations of a 32% decline in short-term obligations and a 10% reduction in total financial debt by year-end, while maintaining net indebtedness close to zero, all of which are supportive of Pemex’s credit profile.
