LatinNews Daily - 06 April 2020

* US credit ratings agency Fitch Ratings has downgraded its rating of Mexico’s state-owned oil company Petróleos Mexicanos (Pemex), cutting the rating of its bonds from ‘BB+’ to ‘BB’ with a 'negative' outlook. Fitch cites the deterioration of Pemex’s stand-alone credit profile to ‘ccc-’, low international oil prices, and the weakening credit linkage between Mexico's economy and Pemex as reasons for this downgrade. With the price of Mexican crude falling below US$20 per barrel (/b) , Fitch estimates that Pemex will be unable to generate enough cash flow to cover operational and financial costs of more than US$25/b. The goverment led by President Andrés Manuel López Obrador has so far failed to take measures in reaction to a looming crisis in the oil sector, and Fitch has changed its assessment of government support for Pemex from ‘moderate’ to ‘weak’. Fitch stated that “the company will need extraordinary government support in the immediate future”, adding that a financial crisis in the deeply indebted oil company could potentially disrupt Mexico’s liquid fuel supply.

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