Moody's rates CFE debt Baa1

Moody's de Mexico, SA de CV said it assigned a Baa1 global-scale rating and an Aaa.mx national-scale rating to Comision Federal de Electricidad SA's proposed senior fixed-rate local notes CFE 14-2 due 2025 and senior floating-rate local notes CFE 15 due 2020. On a combined basis, the total issuance amount should not exceed Ps. 10 billion, and the proposed notes will have a five-year tenor. The outlook is stable.

CFE is wholly owned by the Mexican federal government. The company’s ratings reflect the agency’s estimates of a very high degree of implied government support in the case of financial distress, a very pronounced default dependence between CFE and the Mexican government, CFE's increasing debt, the company's exposure to non-cash subsidies for residential and agricultural customers and the risk of political interference with the established automatic cost-recovery mechanisms such that the company's financial profile and its cash flow generation ability could be somewhat jeopardized going forward.

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