Moody’s gives Pemex B1 rating, but with negative outlook

credit rating firm, moody’s Petroleos Mexicanos’ rating maintained (pemex) In B1, However, it changed the outlook to negative from stable and warned that a rating improvement is “unlikely” in the near term.

This assessment of Pemex’s credit risk is given because the oil company estimates “Will continue to record.” negative free cash flow”, which will not be able to invest to increase production or current reserves, have weak liquidity and high dependence on government support to meet cash requirements and pay off debt.

“Moody’s believes that the support of government of mexico Will remain at very high levels in 2023 and 2024. However, given that the company’s underlying financial infrastructure is likely to deteriorate in the event of no changes to the current business model, Moody’s estimates that the next administration (which will take over at the end of 2024), It will become increasingly difficult for them to repeat what has been seen over the years,” he said.

Also read: Fitch’s rating downgrade of Pemex is a warning: IMEF

He also observed that the oil company’s refining losses have persisted, which is why it requires large amounts of external financing.

Pemex’s profit fell 54% in the first quarter

The rating assumed higher expenses for interest payments and higher debt maturities for the period 2023-2025, hence the base credit risk assessment was maintained at Caa3.

In a statement he said the decision was to maintain ratings. Pemex in B1 (considered highly speculative) with a negative outlook related to “PEMEX’s limited access to capital markets due to its high internal credit risk and lack of measures to reduce exposure to environmental, social and corporate governance risks”.

Also read: Pemex: counting tragedies on the platforms and pipelines of the Mexican oil company

Moody’s estimates that Pemex’s exploration and production business will support cash generation, despite the fact that oil barrel It is sold below the amount established in the government budget in 2023.

Among the positive aspects, he noted that Pemex continues to “Relatively stable” level Oil and gas production and reserves; Additionally, this also increased the production of condensate.

However, “given Pemex’s inability to invest large amounts of capital in exploration and production, Moody’s estimates that in 2023 and 2024, the company will only be able to maintain production and reserves at current levels.”

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