Moody’s downgraded Petróleos Mexicanos (Pemex) from Ba3 to B1, but improved its outlook to stable.
This, after the announcement of the downgrade of the Government of Mexico, from Baa2 to Baa1, but with a change in the outlook, from negative to stable.
“The downgrade of Pemex’s ratings to B1 was motivated by the downgrade of Mexico, given the critical importance of the government’s financial strength and support in the assessment of the oil company’s credit profile due to its high liquidity risk,” the agency said in a statement.
The agency also considered Pemex’s high debt maturities through 2024, the rating agency’s expectations of free cash flow and the need for large amounts of external financing due to losses in the refining business.
🔵 RATING ACTION: Moody’s issued a rating action on the Government of Mexico. More information: https://t.co/Fr4fepguyS
— Moody’s Latin America (@MoodysLatAm) July 8, 2022
The agency acknowledged that although oil and gas production growth has been below targets, it is positive that Pemex has kept production and reserves relatively stable.
“Moody’s estimates that, in 2022-2024, the company will only be able to sustain production and reserves at current levels given its inability to invest larger sums of capital in exploration and production.”
Pemex reports revenue
Weeks before Mody’s released its statement, Pemex recorded a net return of 122.5 billion pesos, after having had a loss of 37.4 billion in the same period of 2021. This after two consecutive quarters of not reporting returns.
According to the report sent by the state-owned company to the Mexican Stock Exchange (BMV), Pemex’s total sales and services revenue increased 59.6%.
The increase was mainly due to the 68.5% in export sales, which he attributes to the recovery in the average price of the Mexican crude blend, since the price went from an average of 56.49 dollars per barrel in the first quarter of 2021, to 88.91 at the beginning of 2022.
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