S&P rates Pemex notes A

Standard & Poor’s said it assigned an A local-currency and mxAAA national scale ratings to Petroleos Mexicanos’ (Pemex) proposed notes of Ps. 15 billion in three tranches: new senior unsecured variable-rate Pemex 15 notes due 2018, new senior unsecured fixed-rate Pemex 15U notes due 2035 and an add-on to the existing Pemex 14-2 notes.

The A global and mxAAA national scale ratings on the company’s existing Ps. 31.4 billion fixed-rate Pemex 14-2 senior unsecured notes due 2026 is unchanged after an add-on.

The company will issue the notes under its Ps. 200 billion long-term notes program, S&P said.

Pemex will use the proceeds for capital expenditures and debt refinancing, the agency said.

The notes benefit from an irrevocable and unconditional payment guarantee from its productive state-owned subsidiaries, Pemex Exploracion y Produccion; Pemex Cogeneracion y Servicios; Pemex Perforacion y Servicios; Pemex-Refinacion y Pemex-Gas y Petroquimica Basica, which are the same companies that now guarantee all of Pemex’s outstanding notes.

The ratings on the notes are based on Pemex’s ratings, the agency said.

Pemex is considered a government-related entity with an almost certain likelihood of extraordinary government support due to its critical role as dominant oil exploration and production company and its integral link with the government, S&P said.

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