“The ratings incorporate a very strong incentive from the Mexican government to support and a strong responsibility to support CFE in the event of financial difficulties, given the importance of the company for the country’s electrical system,” the rating agency said.
In this regard, Fitch assesses the Mexican government’s support for CFE as “extremely likely.”
The agency estimates that total government transfers to CFE for electricity rate subsidies in 2024 will be approximately 81.5 billion pesos, and 89 billion in 2025. A total of 170.5 billion.
However, it is worth noting that the CFE is vulnerable to political changes, since the Mexican government, through the State-owned productive enterprise and CENACE, is responsible for the planning and control of the National Electric System.
“The change in Mexico’s administration could lead to a change in the company’s investment plan and activities. It will be difficult to finance substantial increases in investments without additional debt or government support,” he warns.
CFE plans to add around 8.2 Megawatts to its capacity during 2024-2026.
Fitch also projects that CFE will continue to be exposed to the price of natural gas, since thermal energy remains predominant in Mexico’s energy generation matrix and energy demand will continue to be met primarily through new combined cycles.
The rating agency projects revenue to rise 1% in 2024, driven by higher energy revenues.
As well as an annual Capex of 140,000 million in 2024 and 120,000 million in 2025 in line with the company’s investment plan.
