The international agency Moody’s cut the rating of Petróleos Mexicanos (Pemex) to ‘B3’, from ‘B1’, and put a negative outlook due to the expectation of greater financial pressures for the company in the coming years.
After Moody’s cut, Pemex’s rating is one step away from falling into “substantial risk” territory, as the bonds of a company or country that faces serious financial problems are known.
“Additionally, the company will face increased business risks as it continues to expand its refining capacity and seek to increase its production,” Moody’s said in a report issued late Friday.
According to the rating agency, the decision to cut Pemex’s rating was also due to the absence of concrete measures or actions regarding environmental, social and corporate governance (ESG) risks.
He added that the negative outlook reflects Moody’s expectation that, unless a structural reform is carried out in its business strategy, Pemex’s credit indicators and cash flow generation will suffer further deterioration over the next three years. .
The above will gradually increase its need for financial support from the federal government, which is expected to continue in the coming years although this represents a fiscal burden for the country.
“While unlikely at present, there could be an upgrade of Pemex’s ratings if the company established a more sustainable capital structure with evidence of recovery in operating performance and cash flow generation,” Moody’s said.