Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>The LatAm Corporate Index tightened by 3 basis points (bps) to 319 bps in the week ending on Friday, January 24, 2025.</li>
<li>U.S. Treasuries saw modest increases, with the 10-year yield up 2 bps to 4.64% and the 5-year yield also up 2 bps to 4.45%.</li>
<li>Cemex – Mexico Construction Key Indicators, YPF/Vista - Shale Boom Drives Argentina’s Energy Trade Surplus.</li>
</ul>


The LatAm Corporate Index tightened by 3 basis points (bps) to 319 bps in the week ending on Friday, January 24, 2025.
U.S. Treasuries saw modest increases, with the 10-year yield up 2 bps to 4.64% and the 5-year yield also up 2 bps to 4.45%.
Cemex – Mexico Construction Key Indicators, YPF/Vista - Shale Boom Drives Argentina’s Energy Trade Surplus.


<ul>
<li>We believe that PEMEX’s reclassification, stronger linkage to the sovereign, and its payment program to stabilize balances with suppliers and contractors will support further spread compression.</li>
<li>The spread pickup is more appealing at the belly and long end than at the shorter-dated notes, as most PEMEX bonds maturing before 2029 trade at or near par.</li>
<li>3Q24 results continued to highlight PEMEX’s vulnerability and its significant reliance on government support.</li>
</ul>


We believe that PEMEX’s reclassification, stronger linkage to the sovereign, and its payment program to stabilize balances with suppliers and contractors will support further spread compression.
The spread pickup is more appealing at the belly and long end than at the shorter-dated notes, as most PEMEX bonds maturing before 2029 trade at or near par.
3Q24 results continued to highlight PEMEX’s vulnerability and its significant reliance on government support.


PEMEX 3Q24: Government Support Continues to Strengthen

<ul>
<li>We are initiating coverage on PEMEX with an Outperform recommendation.</li>
<li>We think the potential reclassification to a public company will lead to an improved credit profile, resulting in spread compression due to the increased linkage with the sovereign.</li>
<li>We prefer the PEMEX (B3/BBB/B+) 5.950% 2031, PEMEX 6.625% 2038, and PEMEX 7.690% 2050 bonds, as they are trading wide to the overall PEMEX curve.</li>
</ul>


We are initiating coverage on PEMEX with an Outperform recommendation.
We think the potential reclassification to a public company will lead to an improved credit profile, resulting in spread compression due to the increased linkage with the sovereign.
We prefer the PEMEX (B3/BBB/B+) 5.950% 2031, PEMEX 6.625% 2038, and PEMEX 7.690% 2050 bonds, as they are trading wide to the overall PEMEX curve.


Initiating Coverage on Pemex: Set to Outperform on Reclassification Potential

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Pemex's ESG as "Weak", in line with the "Weak" Environmental, Governance and Social scores. Controversies are "Material", but Disclosure is "Adequate".

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).  We assess Pemex's ESG as "Weak", in line with the "Weak" Environmental, Governance and Social scores. Controversies are "Material", but Disclosure is "Adequate". 

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Pemex's ESG as "Adequate", in line with its "Adequate" Environmental and Social scores. The company has a "Weak" score for the Governance pillar. Controversies are "Material", but Disclosure is "Adequate".

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).  We assess Pemex's ESG as "Adequate", in line with its "Adequate" Environmental and Social scores. The company has a "Weak" score for the Governance pillar. Controversies are "Material", but Disclosure is "Adequate". 

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)

EM Spreads – Weekly News & Views

LatAm Corporate Index tightens, U.S. Treasuries see modest increases, Cemex and YPF/Vista drive Mexico and Argentina's economic indicators.

Leandro Gubler

PEMEX 3Q24: Government Support Continues to Strengthen

PEMEX's reclassification and payment program will help spread compression, but vulnerability and reliance on government support remain key concerns.

Leandro Gubler

Initiating Coverage on Pemex: Set to Outperform on Reclassification Potential

Initiating coverage on PEMEX with an Outperform recommendation, citing potential reclassification as a public company and compelling bond...

Leandro Gubler

Pemex - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Pemex's ESG as "Weak", in...

Lucror Analytics

Pemex - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Pemex's ESG as...

Lucror Analytics

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

EM Spreads – Weekly News & Views

​LatAm Corporate Index tightens, U.S. Treasuries see modest increases, Cemex and YPF/Vista drive Mexico and Argentina's economic indicators.

Leandro Gubler

PEMEX 3Q24: Government Support Continues to Strengthen

​PEMEX's reclassification and payment program will help spread compression, but vulnerability and reliance on government support remain key concerns.

Leandro Gubler

Initiating Coverage on Pemex: Set to Outperform on Reclassification Potential

​Initiating coverage on PEMEX with an Outperform recommendation, citing potential reclassification as a public company and compelling bond...

Leandro Gubler

Pemex - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Pemex's ESG as "Weak", in...

Lucror Analytics

Pemex - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Pemex's ESG as...

Lucror Analytics

LatAm Corporate Index tightens, U.S. Treasuries see modest increases, Cemex and YPF/Vista drive Mexico and Argentina's economic indicators.

PEMEX's reclassification and payment program will help spread compression, but vulnerability and reliance on government support remain key concerns.

Initiating coverage on PEMEX with an Outperform recommendation, citing potential reclassification as a public company and compelling bond...