Pemex downgrades
Ratings agency Fitch on June 6 downgraded the bonds issued by state-owned oil firm Pemex to BB+ from BBB-, pushing the rating into ‘speculative grade’ or ‘junk’ territory. The move came a day after Fitch downgraded the bonds of the federal government by one notch, to BBB from BBB+, citing the impact of Pemex’s financial prospects upon those of the government. Moody’s shifted its outlook for the government’s debt from stable to negative but maintained its A3 rating.
The possibility of further downgrades will be a permanent shadow on the government’s economic actions at least until 2020.
Any downgrading would have an impact on the borrowing costs of Mexican private sector companies in international capital markets.
An abrupt fall in oil prices could be a death knell for Pemex, and would deal a significant blow to the exchequer.
