Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>We maintain Overweight with lower conviction, preferring the 7.690% 2050s for new money and the 6.625% 2035s for lower-duration accounts.</li>
<li>The 69% cut in 2027 federal transfers reflects a lighter maturity burden from liability management, not stronger standalone cash generation or weaker sovereign support.</li>
<li>Front-End refinancing gains are largely priced in; relative value has shifted long, where the 2050s offer superior spread-per-duration compensation but greater downgrade and supply sensitivity. </li>
</ul>


We maintain Overweight with lower conviction, preferring the 7.690% 2050s for new money and the 6.625% 2035s for lower-duration accounts.
The 69% cut in 2027 federal transfers reflects a lighter maturity burden from liability management, not stronger standalone cash generation or weaker sovereign support.
Front-End refinancing gains are largely priced in; relative value has shifted long, where the 2050s offer superior spread-per-duration compensation but greater downgrade and supply sensitivity. 


Pemex: Lower 2027 Transfer Reflects Refinancing Progress

<ul>
<li>Leverage fell sharply and short-term debt was cut by more than half YoY, materially improving PEMEX’s refinancing profile.</li>
<li>Cash generation is still not self-sustaining, with pre-contribution net FCF negative and supplier balances rising sequentially.</li>
<li>Most of the curve now trades near one-year OAS lows, leaving the clearest value in the 2035s and, for duration, the 2050s.</li>
</ul>


Leverage fell sharply and short-term debt was cut by more than half YoY, materially improving PEMEX’s refinancing profile.
Cash generation is still not self-sustaining, with pre-contribution net FCF negative and supplier balances rising sequentially.
Most of the curve now trades near one-year OAS lows, leaving the clearest value in the 2035s and, for duration, the 2050s.


PEMEX 2Q26: Better Metrics, Support Still Matters

<ul>
<li>The LatAm Corporate Index widened by 4 bps to 317 bps in the week ended Wednesday, January 15, 2025. </li>
<li>YPF Priced $1.1bn Bond Due 2034 at 8.5% Yield. PEMEX Commits to Settling Supplier Debts by March</li>
<li>Moody’s Upgrades Ratings of Argentine Non-Financial Companies Following Country Ceiling Adjustment</li>
</ul>


The LatAm Corporate Index widened by 4 bps to 317 bps in the week ended Wednesday, January 15, 2025. 
YPF Priced $1.1bn Bond Due 2034 at 8.5% Yield. PEMEX Commits to Settling Supplier Debts by March
Moody’s Upgrades Ratings of Argentine Non-Financial Companies Following Country Ceiling Adjustment


<ul>
<li>
Weak Revenue Fundamentals: Revenues fell 7.7% YoY as a 40.7% collapse in export volumes and weaker crude pricing severely eroded the company's core top-line performance.</li>
<li>
Persistent Liquidity Stress: Despite minor leverage improvements, liquidity remains critical; short-term debt accounts for 22.5% of total debt and a staggering 194% of available cash.</li>
<li>
Government Dependency: Negative free cash flow of $5.51 billion highlights a broken self-sufficiency model, leaving Pemex entirely reliant on state contributions to offset massive capital and interest obligations.</li>
</ul>



Weak Revenue Fundamentals: Revenues fell 7.7% YoY as a 40.7% collapse in export volumes and weaker crude pricing severely eroded the company's core top-line performance.

Persistent Liquidity Stress: Despite minor leverage improvements, liquidity remains critical; short-term debt accounts for 22.5% of total debt and a staggering 194% of available cash.

Government Dependency: Negative free cash flow of $5.51 billion highlights a broken self-sufficiency model, leaving Pemex entirely reliant on state contributions to offset massive capital and interest obligations.


Pemex 4Q25: Debt Relief Anchors the Credit, Operating Fragility Persists

<ul>
<li>We maintain Overweight on Pemex, anchored by Mexico’s extraordinary support that effectively shifts refinancing needs to the sovereign balance sheet. </li>
<li>We prefer the 2032s for value in the belly and the 2050s for long-end carry and upside. </li>
<li>Near-Term credit remains well-supported, but structural production and downstream weaknesses limit medium-term tightening potential.</li>
</ul>


We maintain Overweight on Pemex, anchored by Mexico’s extraordinary support that effectively shifts refinancing needs to the sovereign balance sheet. 
We prefer the 2032s for value in the belly and the 2050s for long-end carry and upside. 
Near-Term credit remains well-supported, but structural production and downstream weaknesses limit medium-term tightening potential.


Pemex 3Q25: Extraordinary Sovereign Support Reprices Pemex Tighter

Mexico

Petroleos Mexicanos operates as an oil and gas exploration and production services. The Company offers pipeline carriage, petrochemical distributor and shipping centers, logistics, and fuel commercialization services. Petroleos Mexicanos serves customers in Mexico.

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Petroleos Mexicanos (1232Z MM)

Pemex: Lower 2027 Transfer Reflects Refinancing Progress

Pemex’s lighter 2027 transfer reflects refinancing progress, not standalone improvement. We stay Overweight, favoring 2050s for value and 2035s for...

Leandro Gubler

PEMEX 2Q26: Better Metrics, Support Still Matters

PEMEX’s metrics and maturity profile improved sharply, but cash generation still depends on sovereign support and valuation now limits broad upside.

Leandro Gubler

EM Spreads – Weekly News & Views

LatAm Corporate Index widens, YPF prices $1.1bn bond, PEMEX commits to settling debts, Moody's upgrades Argentine companies.

Leandro Gubler

Pemex 4Q25: Debt Relief Anchors the Credit, Operating Fragility Persists

Pemex’s latest results expose a deepening reliance on state aid amid collapsing exports and 194% liquidity stress, making this a critical read for...

Leandro Gubler

Pemex 3Q25: Extraordinary Sovereign Support Reprices Pemex Tighter

Pemex's credit outlook remains positive due to Mexico's strong support, with strategic bond preferences for value and long-term gains. Structural...

Leandro Gubler

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Pemex: Lower 2027 Transfer Reflects Refinancing Progress

Pemex’s lighter 2027 transfer reflects refinancing progress, not standalone improvement. We stay Overweight, favoring 2050s for value and 2035s for...

Leandro Gubler

PEMEX 2Q26: Better Metrics, Support Still Matters

PEMEX’s metrics and maturity profile improved sharply, but cash generation still depends on sovereign support and valuation now limits broad upside.

Leandro Gubler

EM Spreads – Weekly News & Views

​LatAm Corporate Index widens, YPF prices $1.1bn bond, PEMEX commits to settling debts, Moody's upgrades Argentine companies.

Leandro Gubler

Pemex 4Q25: Debt Relief Anchors the Credit, Operating Fragility Persists

Pemex’s latest results expose a deepening reliance on state aid amid collapsing exports and 194% liquidity stress, making this a critical read for...

Leandro Gubler

Pemex 3Q25: Extraordinary Sovereign Support Reprices Pemex Tighter

​Pemex's credit outlook remains positive due to Mexico's strong support, with strategic bond preferences for value and long-term gains. Structural...

Leandro Gubler

LatAm Corporate Index widens, YPF prices $1.1bn bond, PEMEX commits to settling debts, Moody's upgrades Argentine companies.

Pemex's credit outlook remains positive due to Mexico's strong support, with strategic bond preferences for value and long-term gains. Structural...