Moody’s Downgrades Pemex’s Rating to B3, Citing Poor Credit Quality
Mexico’s State-Owned Oil Firm Pemex Downgraded by Moody’s
Moody’s, the ratings agency, has downgraded Mexico’s state-owned oil firm Pemex by two notches to B3 from B1, indicating poorer credit quality. This comes as a significant blow to the company’s financial standing.
Moody’s Negative Outlook for Pemex
Moody’s has assigned a negative outlook to Pemex, expressing concern about the company’s high level of government support and the potential risks associated with Mexico’s fiscal conditions deteriorating by 2024.
Pemex’s Alarming Debt Levels
Pemex, one of the world’s most indebted oil companies, is currently grappling with financial liabilities exceeding $100 billion. This places the company in a precarious financial position.
Mexico’s Fiscal Deficit and Pemex’s Prospects
Moody’s anticipates a considerable increase in Mexico’s fiscal deficit due to high borrowing costs, social spending, and government projects. This is expected to have a direct impact on Pemex’s future prospects.
Challenges for Mexico’s Next Administration
Moody’s predicts that the costs of supporting Pemex will rise significantly by the time Mexico’s next administration assumes power in October. This presents a challenging scenario for the incoming government.
Mexico’s Government Orders Expropriation at Pemex Refinery
On the same day as the downgrade, Mexico’s government issued an order to expropriate a hydrogen plant at a Pemex refinery. This plant had been previously sold to France’s Air Liquide under the previous administration, adding another layer of complexity to Pemex’s operations.
