Fitch prunes, places Pemex on watch

Fitch Ratings said it downgraded Petroleos Mexicanos' (Pemex) long-term foreign- and local-currency issuer default ratings to B+ from BB-. The agency also placed the ratings on rating watch negative. Fitch also trimmed the ratings on about $80 billion of Pemex's international notes outstanding to B+/RR4 from BB-.

“The downgrades reflect Pemex's continued weak operating performance, which has resulted in Fitch lowering several of the company's ESG relevance scores to 5 and is expected to further limit its sources of financing from banks, investors and suppliers. The lowering of these relevance scores reflects the environmental and social impact associated with multiple accidents at Pemex's operating facilities since February 2023, which resulted in casualties and injuries to its employees and damages to critical infrastructure and assets,” the agency said in a press release.

The RWN concerns the Mexican government's ability and willingness to help the company's liquidity position and capital structure over the next two years without concessions from creditors, Fitch said.

Pemex faces international debt bond maturities of $4.6 billion in 2023 and $10.9 billion in 2024. “The refinancing of this debt will expose the company to higher interest expense that would further stress its cash flow. An inability to refinance the capital markets debt with similar or other long-term financial instruments would exacerbate its liquidity risk by the end of 2024. Resolution of these issues driving the RWN could extend beyond six months,” Fitch said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.