Braskem Idesa Contract Seen Unaffected by Probe: Lucror
(Bloomberg) -- Braskem Idesa SA’s ethane supply contract with Pemex is unlikely to be affected by a Mexican corruption investigation, Lucror Analytics analyst Soummo Mukherjee wrote in a note.
- Headlines stemming from corruption allegations made by former Pemex CEO Emilio Lozoya Austin led to a drop in price of bonds due 2029 to around 88 cents on the dollar, providing a “good entry point” to buy, Lucror said
- NOTE: Previously, Ex-Pemex Chief Denies Guilt, Will Cooperate in Odebrecht Case
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Following call with management, Lucror said a deal between Braskem Idesa and Pemex for the supply of ethane has not been implicated in testimony provided by Lozoya and has been extensively reviewed by authorities and banks with no findings of wrongdoing
- “The call left us more positive on the impact on Braskem Idesa from potential corruption allegations arising from the Lozoya case”
- The contract is unprofitable, but Pemex is unlikely to cancel it. Instead, Lucror sees renegotiation for a long-term solution as a more likely outcome
- Renegotiation could lead to investments of around $150m for a terminal and ethane transport pipelines that would lower costs and provide upsides for both Pemex and Braskem Idesa
- NOTE: Braskem Idesa is a joint venture between Brazilian petrochemical company Braskem and Mexico-based Grupo Idesa
By Ezra Fieser