Another bailout for Pemex with public debt
Finally, the Ministry of Finance announced the new plan to support Pemex with public funds under a different format, where it will issue new pre-capitalized bonds or notes.
The goal is to improve liquidity for the company's debt, which exceeds $100 billion, so the new P-Caps represent about 10% of Pemex's debt.
The SHCP is very clear in stating that these bonds are not a guarantee for Pemex, that is, the P-Caps will be public debt and the government will not assume Pemex's debt as had been speculated as part of the new rescue program for the company and according to the Treasury, the issuance of these P-Caps will be issued within the debt ceilings authorized by the Congress of the Union.
There are, of course, many questions that the SHCP's statement doesn't address. The first is the amount of the first P-Cap issue, which, according to Bloomberg, will reach $10 billion. Of course, the details of these notes, such as their maturity and, most importantly, the interest rate they will pay, are also unknown. This will likely not be low, given the expectation of interest rate hikes in the United States, which may begin on July 29.
The other big question is whether the P-Caps will truly be a lifeline for Pemex, which, despite this transaction, remains the biggest risk to public finances and a risk of a downgrade of Mexico's debt rating.
The advantage for Pemex, led by Víctor Rodríguez, is that it will obtain resources without issuing new debt, which is also very difficult for the company because it lacks significant investment.
The main problem is that it is indeed a significant aid to improving Pemex's liquidity problems, but it requires a thorough restructuring not only of its dollar-denominated debt, but also of its 400 billion pesos in liabilities to its suppliers, and of its high labor costs, as well as a strategy that truly allows the company to stay afloat.
INA proposes certified automotive workshops
Francisco González, president of the National Auto Parts Industry, has a very interesting proposal to benefit not only the auto parts industry but also multiple auto repair shops by allowing new cars to be serviced in workshops authorized by automakers without voiding their warranty.
It's a truly interesting initiative that car dealers clearly don't like, because today they are the only ones authorized to service new cars without voiding the warranty.
What González is seeking, and what is being discussed not only with the Ministry of Economy but also with automobile manufacturers and importers, is the creation of a NOM (Official Mexican Standard) and a training program so that previously authorized workshops can service new automobiles.
González explains that this will generate greater competition for the benefit of users, and that certified workshops already exist in other countries, such as Spain.
A successful TelevisaUnivision bond issue
With demand exceeding 4 to 1, Televisa-Univision's $1.5 billion bond issue in New York was finalized, the largest in its history, confirming investor interest in the company co-managed by Alfonso de Angoitia and Bernardo Gómez.
The 2032 bond issue will allow the company to restructure its debt and improve its maturity profile.
The operation was led by JP Morgan, and of course, congratulations are in order for Juan Pablo Newman, CFO of TelevisaUnivision.
GDP remains stagnant but without recession
INEGI published the IGAE (National Institute of Statistics and Geography) at the end of May, showing 0% growth compared to April. While this confirms that the economy is not in recession, it also remains stagnant, as compared to May 2024, it grew only 0.4% below market expectations.
At the sectoral level, the primary sector, or agriculture, grew 5.7% annually; while tertiary activities, which include services, grew only 0.6%. The major problem is that secondary activity, which includes industries, contracted 0.4% annually, which explains the loss of formal jobs, including workers affiliated with the Mexican Social Security Institute (IMSS).
Citi Survey Lowers 2026 GDP Target
Citi published its biweekly survey of analysts yesterday, and the consensus maintained its GDP growth expectation of 0.2% this year, meaning no recession but still stagnant. The bad news is that they've reduced their GDP target for 2026 from 1.3% to 1.2%, which is clearly insufficient to create the jobs the country needs.
They anticipate a 25 basis point rate cut by August, closing this year at 7.50%.
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