“What needs to be said about CFE is that the amount, although it grew a lot, is a much more modest amount [que el reportado por Pemex]but it must be taken into account that CFE has reported losses in the last two years, so it does not have sufficient resources to pay these maturities”, says Víctor Gómez Ayala, an economist and financial analyst.
The state-owned company has incurred extra costs in recent months, mainly derived from the high prices of natural gas, the fuel it uses the most and which has registered strong increases in recent months, as tensions in Eastern Europe continue. and supply to the mainland remains uncertain. Long-term financial debt has not suffered the same fate and has remained practically stable in the last twelve months, with an increase of just 1.3%, according to company reports.
Analysts already anticipate new financial pressure for the company: the state-owned company does not necessarily have to pay these amounts in the coming months, but the lack of liquidity will force it to opt for refinancing and the high interest rates that now permeate the market will make the strategy more expensive. The company has recorded a net loss of 50,000 million pesos so far this year and has seen sharp increases in its costs. Analysts say that this indicates that the state company would not have the liquidity to meet its payment obligations in the short term. “What the numbers tell us is that the money or the accounts receivable are not enough to pay their short-term debt,” says Diego Diego Díaz, a researcher at the Mexican Institute of Competitiveness (IMCO).
The Bank of Mexico, as well as other central banks, has followed a strategy based on increasing its reference rates to contain inflation. And the state, like other debt issuers, have been affected by this. “They don’t have to pay off that debt in the next twelve months, but the main risk is in what market conditions they will have to refinance that debt. The more short-term debt you have, the more you are exposed to the fact that in the refinancing process, the amount exposed to the increase in short-term rates by central banks is greater”, Gomez Ayala explains.
The company’s current liabilities – which include debt to suppliers and the payment of taxes, among other items – also grew significantly at the end of the last quarter and ended at 275,000 million pesos, an increase of almost 35%. At the same time, the current assets of the state company decreased by almost 11% to 237,000 million pesos. For the first time in a long time, the company’s liabilities exceeded the value of its assets.
The IMCO researcher explains that this difference is usually called working capital, a measure that is usually a measure of the company’s liquidity, that is, how much companies can meet their short-term obligations with the resources they will have in the same period. And in the case of the CFE this indicator is already asymmetric and has gone from being positive to negative.
“We do not know how it will behave in the following months, but as of this cut-off date of September 30, what it reflects is a pressure on the company’s finances in terms that it could have less liquidity to face its obligations with terms of less than one year”, he explains in an interview.
The company’s numbers, analysts say, suggest that its strategy could be based on something similar to what the Pemex administration has done: refinance short-term debt to be paid in subsequent years.
The problem they infer is the adverse environment of high rates, the drop in the value of the company’s current assets that give it less room for negotiation and the possibility of generating a dynamic where, due to lack of resources, it is decided to refinance the liabilities in conditions that are not necessarily good for the state company.
“The risk is not that they kick the debt, it is that they kick it in a short-term strategy that makes it snowball very soon, the risk is that this becomes a continuous refinancing strategy and that it must be be done under conditions of harder rates”, says Gómez Ayala.