Moody’s boosts Pemex’s rating, citing its ‘very high’ government support

The recognition standing bureau Moody’s accrued the standing of Mexico’s state-owned lipid and state steadfast Petróleos Mexicanos (Pemex) by 2 notches, from B3 to B1, connected Monday, citing the Mexican government’s “greater commitment” to helping the institution conscionable its fiscal obligations done 2027. 

The determination marks a large alteration successful the cognition of Pemex’s recognition risk, arsenic President Claudia Sheinbaum’s medication aims to leverage its 2025-2035 Strategic Plan to alleviate fiscal unit connected Pemex. 

Capital injections from the government, including US $12 cardinal successful bonds successful July and a $4.4-billion concern money successful August, played a relation successful Pemex’s recognition standing rise. (Special/Cuartoscuro.com)

The authorities issued US $12 cardinal successful bonds to assistance Pemex successful July, earlier establishing a 250 billion-peso ($4.4 billion) investment fund for the lipid institution successful August. 

“These actions bespeak a alteration successful the government’s approach,” said Moody’s Senior Vice President of Credit Roxana Muñoz. “The standing upgrade reflects a greater committedness by the existent Mexican medication to enactment Pemex.” 

Moody’s revised its authorities enactment presumption for Pemex upward from precocious to precise high. Meanwhile, it near Pemex’s baseline recognition appraisal (BCA) astatine the lowest connected its scale, oregon “ca,” owed to the company’s mediocre stand-alone recognition strength. 

“Pemex continues to look persistent structural challenges, which we expect volition proceed to unit its fiscal performance,” Muñoz said.

Muñoz explained that the “stable” outlook assigned to Pemex means that Moody’s does not expect a further standing alteration successful the abbreviated term. However, it could upgrade the institution if it tin instrumentality a sustainable strategy and show a existent betterment successful its operating show and currency generation.

“Unless structural measures are implemented to efficaciously trim these currency needs, the ratings volition stay constrained,” Moody’s stated. “Given the beardown ties betwixt Pemex and the authorities of Mexico, governance hazard remains a applicable origin successful the standing action.” 

Moody’s said that Pemex volition request astir US $7 cardinal a twelvemonth successful funds betwixt 2026 and 2027, which the Mexican authorities says it volition assistance it obtain. 

“The Finance Ministry reiterates that it volition proceed to enactment Petróleos Mexicanos’ financial strategy, complementing the actions the institution is taking to amended its operating concern and administrative management,” the Finance Ministry said successful a statement. 

However, Moody’s warned that a downgrade of the authorities of Mexico’s ‘Baa2’ standing could besides lend to a downgrade of Pemex’s rating.

The bureau besides highlighted the request for much details connected the imaginable usage of the concern money to measure its attractiveness to the backstage sector.

With reports from Milenio, El Financiero, El País