Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>Argentina’s $20 Billion IMF Deal Could Calm Markets Ahead of Midterms</li>
<li>Pemex Monthly Report: February/Minerva Positioned to Benefit from China’s Shift in Protein Imports</li>
<li>Cemex: Stable Outlook Affirmed Despite Hybrid Reclassification Dragging Metrics/ YPF Launches “Vaca Muerta Institute” to Support Shale Growth</li>
</ul>


Argentina’s $20 Billion IMF Deal Could Calm Markets Ahead of Midterms
Pemex Monthly Report: February/Minerva Positioned to Benefit from China’s Shift in Protein Imports
Cemex: Stable Outlook Affirmed Despite Hybrid Reclassification Dragging Metrics/ YPF Launches “Vaca Muerta Institute” to Support Shale Growth


<ul>
<li>4Q24 results: Minerva - acquisition outlook and market tailwinds support credit upgrade, YPF - strategic progress offset weak quarter, and Pemex - high carry but risk outweigh rewards. </li>
<li>Argentina 4Q24 GDP Beats Expectations, but Outlook Hinges on Policy and IMF Deal</li>
<li>Sheinbaum Restructures Pemex to Strengthen State Control - Pemex’s elevated leverage, continued E&amp;P underperformance, and exposure to refining losses remain key concerns.</li>
</ul>


4Q24 results: Minerva - acquisition outlook and market tailwinds support credit upgrade, YPF - strategic progress offset weak quarter, and Pemex - high carry but risk outweigh rewards. 
Argentina 4Q24 GDP Beats Expectations, but Outlook Hinges on Policy and IMF Deal
Sheinbaum Restructures Pemex to Strengthen State Control - Pemex’s elevated leverage, continued E&amp;P underperformance, and exposure to refining losses remain key concerns.


<ul>
<li>Weak 4Q24 results, rising leverage, and lack of a clear plan heighten credit concerns.</li>
<li>We downgrade Pemex to Underperform. In our view, the absence of a clear financial plan under the current circumstances significantly undermines Pemex’s management credibility in addressing its serious debt challenges.</li>
<li>From a credit perspective, results were marked by a 27.1% sequential decline in LTM adjusted EBITDA, while total debt decreased by $2.1 billion.</li>
</ul>


Weak 4Q24 results, rising leverage, and lack of a clear plan heighten credit concerns.
We downgrade Pemex to Underperform. In our view, the absence of a clear financial plan under the current circumstances significantly undermines Pemex’s management credibility in addressing its serious debt challenges.
From a credit perspective, results were marked by a 27.1% sequential decline in LTM adjusted EBITDA, while total debt decreased by $2.1 billion.


PEMEX 4Q24: High Carry, But Risks Outweigh Rewards

<ul>
<li>We need to see concrete action from the Mexican government to maintain an Outperform recommendation.</li>
<li>Pemex’s deteriorating operational metrics will likely increase its need for government assistance.</li>
<li>Within Pemex’s capital structure, we continue to prefer the PEMEX (B3/BBB/B+) 5.950% 2031, the PEMEX 6.625% 2035, the PEMEX 6.625% 2038, and the PEMEX 7.690% 2050.</li>
</ul>


We need to see concrete action from the Mexican government to maintain an Outperform recommendation.
Pemex’s deteriorating operational metrics will likely increase its need for government assistance.
Within Pemex’s capital structure, we continue to prefer the PEMEX (B3/BBB/B+) 5.950% 2031, the PEMEX 6.625% 2035, the PEMEX 6.625% 2038, and the PEMEX 7.690% 2050.


Pemex: Lack of Concrete Action Weights on the Outperform Thesis

<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

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

Argentina secures $20 billion IMF deal to stabilize markets before midterms, while Pemex and Cemex navigate challenges and YPF launches institute...

Leandro Gubler

Weekly News & Views – Mar 21, 2025

4Q24 results show Minerva improving, YPF progressing, but Pemex remains high risk. Argentina's GDP beat estimates, but outlook depends on policy...

Leandro Gubler

PEMEX 4Q24: High Carry, But Risks Outweigh Rewards

Pemex's weak 4Q24 results, rising leverage, and lack of clear financial plan lead to credit concerns, prompting a downgrade to Underperform.

Leandro Gubler

Pemex: Lack of Concrete Action Weights on the Outperform Thesis

Mexican government must take action to support Pemex as operational metrics worsen, specific bonds recommended for investment.

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

EM Spreads - Weekly News & Views

​Argentina secures $20 billion IMF deal to stabilize markets before midterms, while Pemex and Cemex navigate challenges and YPF launches institute...

Leandro Gubler

Weekly News & Views – Mar 21, 2025

4Q24 results show Minerva improving, YPF progressing, but Pemex remains high risk. Argentina's GDP beat estimates, but outlook depends on policy...

Leandro Gubler

PEMEX 4Q24: High Carry, But Risks Outweigh Rewards

​Pemex's weak 4Q24 results, rising leverage, and lack of clear financial plan lead to credit concerns, prompting a downgrade to Underperform.

Leandro Gubler

Pemex: Lack of Concrete Action Weights on the Outperform Thesis

​Mexican government must take action to support Pemex as operational metrics worsen, specific bonds recommended for investment.

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

Argentina secures $20 billion IMF deal to stabilize markets before midterms, while Pemex and Cemex navigate challenges and YPF launches institute...

Pemex's weak 4Q24 results, rising leverage, and lack of clear financial plan lead to credit concerns, prompting a downgrade to Underperform.

Mexican government must take action to support Pemex as operational metrics worsen, specific bonds recommended for investment.

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