Moody’s rates Pemex certs Baa3

Moody’s Investors Service said it assigned Baa3/Aa3.mx ratings to Petroleos Mexicanos’ proposed senior unsecured variable rate certificados bursatiles due 2024 (Pemex-19). The proposed certificados bursatiles will be the first draw down under Pemex’s Ps. 100 billion certificados bursatiles program. The offering will be up to Ps. 10 billion with a five year tenor.

Pemex’s Baa3/Aa3.mx ratings are based on its caa1 baseline credit assessment, which considers its high financial leverage, low interest coverage, heavy tax burden and negative free cash flow, as well as its declining production and proved reserves caused by its inability to fund adequate capital investment to replace reserves. “Pemex’s intrinsic liquidity is weak, and the company remains reliant on government support until it can consistently generate free cash flow,” Moody’s said in a press release.

The outlook is negative.

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