Moody's rates Pemex debt Baa1

Moody's Investors Service said it assigned a Baa1 foreign-currency bond rating and Aaa.mx national scale rating to the initial Ps. 6 billion and Ps. 4 billion issuances under Petróleos Mexicanos' Ps. 70 billion certificados bursatiles program.

The outlook is stable.

The agency said Pemex's ratings reflect the company's position as Mexico's largest company and its monopoly status as the country's sole producer of crude oil, natural gas and refined products. Pemex's debt obligations are not guaranteed by the government of Mexico, but Moody's said its ratings reflect implicit government support given the company's strategic importance as a generator of tax revenues and foreign exchange and as a national asset belonging to the people of Mexico.

However, Pemex faces numerous operational and financial challenges, Moody's said: it has not fully replaced production for many years, a high tax burden has stymied capital retention despite ample pre-tax cash flows and investment in reserves and key infrastructure has resulted in a heavy debt burden.

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