(Bloomberg) -- Mexico's government said it had slashed Petroleos Mexicanos' debt burden by $3.2 billion through a refinancing operation.
The government swapped debt that was expiring soon for a new bond with a maturity of 10 years, while also refinancing some medium maturity debt that was cheap, according to a statement from the Finance Ministry.
The operation will reduce the “financial pressure” on Pemex by $10.5 billion between 2024 and 2030, the ministry said, adding that the refinancing wouldn't reduce the fiscal budget. The government contributed $3.5 billion to the operation, which helped narrow the spread to sovereign bonds by 50 basis points, reducing Pemex's annual financial costs by $180 million.
Mexico's President Andres Manuel Lopez Obrador announced a $3.5 billion capital injection into Pemex in early December, saying it would be made through a series of bond market transactions. That came on top of initiatives last year to cut taxes and overhaul management at the company.
Pemex is flailing under $113 billion of debt, the most of any major oil producer, struggling to reverse over a decade of crude output declines, and is highly reliant on the federal government being willing to continue paying bondholders.
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