Flash Report /

Braskem-Idesa suffering from Pemex's non-payment

  • Pemex continues to miss payments to suppliers and contractors, such as Braskem-Idesa

  • This suggests Pemex's finances might not be as sound as the government wants us to believe

  • We retain our Hold on Pemex and Sell on Grupo Idesa

Rafael Elias
Rafael Elias

Director, Latin America Credit

Tellimer Research
27 February 2020
Published byTellimer Research

Pemex has been missing payments to suppliers and contractors since the start of the Lopez Obrador administration. Although the Mexican oil monopoly remains current on all its debt obligations, the situation is different when it comes to its contracts with third parties.

This is worrisome because it suggests to us that Pemex's finances might not be as sound as the government wants us to believe. Recently, the company stated that it was "almost current on its payments to suppliers"; however, that is inconsistent with the message that 'all is well' at Pemex.

On 26 February, Braskem-Idesa issued a statement saying that the company has not received a payment of US$26mn from Pemex". Braskem-Idesa also said that it is still in talks with Pemex "to protect its rights and resolve the issue", adding that, "if necessary, it would take the appropriate contractual measures".

When we visited Mexico in December, we met with Lopez Obrador's Chief of Staff, who told us that "all contracts related to Pemex were or would be under revision". However, this particular case does not seem to be a matter of revising the Braskem-Idesa contract; instead, it is about Pemex's failure to deliver raw materials to one of Mexico's largest contractors, and its failure to compensate for this breach in the parties' contract.

This reinforces our recommendations on Pemex (Hold) and Braskem-Idesa (Sell) and makes us wonder how many other Pemex-third party relationships could be in a similar state. The case should be of great concern to Pemex's bondholders.