UPDATE 1-Mexico received $2.38 billion payout from oil hedging program – finance ministry

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MEXICO CITY, Jan 29 (Reuters) – Mexico has received $2.38 billion from its annual oil hedging program for 2020 in the fourth quarter, the finance ministry said on Friday, a lifeline for an economy pushed deeper into recession by the coronavirus pandemic.

The hedge, the world’s largest financial oil deal, is designed to protect Latin America’s second-largest economy against oil price crashes. In previous years Mexico has spent about $1 billion on the insurance policy.

In a report, the finance ministry said the income from the hedge “compensated the fall in oil revenues stemming from lower international crude prices.”

Deputy finance minister Gabriel Yorio said the payout covered about 80% of income lost from the lower prices.

Mexico’s sovereign credit rating came under increasing scrutiny in 2020 after a third rating agency downgraded the bonds of Petroleos Mexicanos, or Pemex, to “junk” status in April.

It had hedged oil revenues for a turbulent 2020 at $49 a barrel.

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