Moody's rates Pemex issue Baa3

Moody's Investor Service said it assigned a Baa3 senior unsecured rating to Pemex (Petroleos Mexicanos SAB de CV) issuance of CHF 365 million 1¾% notes of due 2023.

Proceeds will be used for general corporate purposes, including investments in strategic projects and debt refinance.

The outlook is stable.

The notes will be jointly and severally guaranteed by the company's subsidiaries, namely Pemex Exploracion y Produccion, Pemex Transformacion Industrial, Pemex Perforacion y Servicios, Pemex Logistica and Pemex Cogeneracion y Servicios.

The ratings are based on the company's B3 baseline credit assessment and take into consideration the company's large proved hydrocarbon reserves, daily production averaging 2.65 million barrels of oil equivalent per day in 2017, Moody's said, and its dominant role and integrated operations in the energy industry in Mexico.

The ratings are constrained by the company's weak liquidity, heavy tax burden and the resulting weak free cash flow, along with its high financial leverage and low interest coverage, the agency said.

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