LatinNews Daily - 17 December 2024

*International credit ratings agency Fitch Ratings has maintained the Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) of Mexico’s state-run oil company Pemex at B+ with a ‘stable’ outlook. It has also affirmed the rating of approximately US$80bn of Pemex’s international notes outstanding at B+ with a Recovery Rating of RR4. Fitch notes that its ratings are four notches below the sovereign reflecting its view that Pemex “remains financially vulnerable and its ESG [environmental, social, and governance] track record further impairs its ability to raise capital”. Fitch states that the inclusion of Pemex in Mexico’s 2025 budget, for the second year in a row, “is credit positive” and signals “increased visibility on timing and magnitude of government support”. The approved budget included US$6.7bn in support for Pemex next year, covering most of its US$8.9bn of debt maturities for the year. “Although still unclear, it is likely that the balance will be covered with tax reductions and deferrals, and possibly refinancing of some sort,” adds Fitch, stating that additional support will also be needed to address the company’s US$18.2bn of short-term debt reported in the third quarter this year. Fitch states that “a continuing trend of support and enhanced visibility” could lead to “a change in the approach to notching to Pemex’s rating” in future. Fitch cites cash flow generation, continuing indebtedness, operational issues including fires at critical assets and infrastructure, and other ESG concerns as challenges for the company.