Moody’s drops Pemex to Baa1

Moody's Investors Service said it downgraded Petroleos Mexicanos (Pemex)’s global foreign currency and local currency ratings to Baa1 from A3.

Simultaneously, the agency lowered Pemex’s baseline credit assessment, which reflects its standalone credit strength, to ba3 from ba1.

In a separate action, Moody's de Mexico downgraded the global scale senior unsecured rating to Baa1 from A3 and the senior unsecured medium-term program rating to provisional Aa1 from provisional A3, and confirmed the national scale ratings of Aaa.mx and MX-1.

The actions were prompted by Moody's view that the company's current weak credit metrics will deteriorate further in the near- to medium-term.

The outlook on all ratings was changed to negative. This concludes the review for downgrade initiated on Aug. 25.

"Moody's believes that Pemex's credit metrics will deteriorate further in the short to medium term as oil prices remain depressed, production continues to drop, taxes remain high, and the company's capex needs are financed with debt" Moody’s vice president, senior credit officer Nymia Almeida said in a news release.

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