“The downgrade of Pemex’s ratings was motivated by the downgrade of Mexico’s rating, given the critical importance of the financial strength of the Government and the support in the evaluation of Pemex’s credit profile to its high liquidity risk,” said the qualifier in a statement.
The action, Moody’s reported, also considered Pemex’s high debt maturities until 2024 and the rating agency’s expectations of “continued negative” free cash flow and the need for large amounts of external financing given “persistent losses” in the refining business.
In addition, Moody’s argued for its decision that the Mexican state oil company needs to maintain capital spending at least at current levels to keep production and reserves stable.
“The action also took into account that Pemex’s access to capital markets is currently limited due to its high intrinsic credit risk,” the rating agency added.
Pemex, considered the most indebted oil company in the world, announced weeks ago that it was analyzing various mechanisms to regularize its debt with suppliers, which amounts to some 13.5 billion dollars. Its financial debt amounts to 109,000 million dollars.
Last week, Standard and Poor’s (S&P) revised the outlook on Mexico’s sovereign credit rating to “stable” from “negative”, citing more cautious fiscal and monetary policies, and affirmed its long-term sovereign foreign currency rating of “BBB”. “.
