Mexico's government approved a new "fiscal stimulus" for its heavily indebted state energy company Pemex, according to a decree published on Tuesday, part of a strategy meant to meet its obligations and undertake investments this year.
The stimulus consists of a tax credit equivalent to 100% of the company's profit sharing rate, or DUC, for October, November and December 2023, as well as January 2024, the decree published in the official gazette showed.
Pemex's DUC, effectively a tax paid to the government, and one of the most important contributions to state coffers, has been gradually lowered during the presidency of Andres Manuel Lopez Obrador from a high of 65% to 30% for this year.
While the Tuesday announcement does not detail the amount of the benefit, a high-ranking Pemex source told Reuters that it amounted to around 110 billion pesos (about $6.4 billion) and that it showed the government's support.
"This new support will help us take off pressure and close the administration orderly," added the source, who spoke on the condition of anonymity. Lopez Obrador's term ends on October and his chosen successor, Claudia Sheinbaum, is leading most polls.
It comes after Moody's Investors Service on Friday cut the rating for Pemex bonds from B3 to B1, pushing them deeper into speculative - or junk - status.
The credit ratings agency had justified the cut with what it said was a worsening credit quality and also assigned a "negative outlook" that indicates a higher probability of another change to the rating over the medium term.
It added that government support was high but could be threatened if fiscal conditions deteriorate this year.
Neither Pemex nor the finance ministry responded to requests for further comment following the publication in the official gazette.
(Reuters - Reporting by Ana Isabel Martinez; Writing by Stefanie Eschenbacher; Editing by Marguerita Choy)