(Bloomberg) -- Dollar bonds from Petroleos del Peru SA slumped Monday in low trading volume after Peru said it won’t bail out the struggling state-owned oil company.

Notes due in 2032 fell over 2.5 cents on the dollar to 71 cents, the biggest intraday decline since August 2022, according to indicative pricing data compiled by Bloomberg. 

“We will not inject the requested cash for a simple reason, because we don’t have the funds to do so,” Prime Minister Alberto Otarola said in an interview on news channel Latina Sunday following Petroperu’s request for a $2 billion rescue package.  “We think there are other priorities.” 

Otarola’s remarks will deepen the financial crisis at Petroperu, as the company is known, which has been warning about its dwindling cash position for months. The company is mired in debt tied to the construction of a $6 billion refinery that opened late last year. 

Read More: Petroperu Is Asking for Nearly $2 Billion in Government Support

Petroperu has said it needs $1.15 billion in cash soon to pay suppliers of the refinery and to convert a $750 million loan with the government into shares. Otarola said the government would finance neither of those, but would reschedule debt payments. 

Petroperu had already received a cash injection worth $1 billion in 2022, when it faced a similar crisis. It has outstanding bonds with private investors due in 2032 and 2047 that helped fund the construction of the refinery.  

“We can’t fall into the other extreme either and say that Petroperu should go bankrupt,” Otarola said, without elaborating on how the company would continue operating if it runs out of cash. 

--With assistance from Zijia Song and Philip Sanders.

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