S&P boosts Pemex

Standard & Poor's said it raised its long-term foreign currency corporate credit rating on Petroleos Mexicanos (Pemex) to BBB+ from BBB.

The agency said it also affirmed its A- long-term local currency credit rating on Pemex.

The outlook is stable.

According to S&P, the rating action follows the raising of its foreign currency sovereign credit ratings on the United Mexican States to BBB+/A-2 from BBB/A-3.

The agency noted that it also raised its local currency credit rating on Mexico to A+/A-1 from A/A-1.

The outlook is stable.

The agency said that the affirmation and stable outlook on the local currency rating on Pemex reflects our view that any improvement would require the government to contribute sufficient capital to allow for significant deleveraging, a sharp reduction in Pemex's tax burden, so the bulk of capital expenditures could be internally funded, an improvement in Pemex's operations, particularly in reserve replacement and a reduction of its growing unfunded pension liabilities.

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