Moody’s applies Baa3 to Pemex notes

Moody's Investors Service said it assigned a Baa3 senior unsecured rating to Pemex (Petroleos Mexicanos)'s issuances for a total combined amount of €4.25 billion ($4.5 billion) in three tranches: €1.75 billion 2½% notes due 2021, €1.25 billion 3¾% notes due 2024 and €1.25 billion 4 7/8% notes due 2028.

The company will use the proceeds for general corporate purposes, including investments in strategic projects and debt refinance.

The outlook is negative.

The notes were issued by Pemex and will be jointly and severally guaranteed by the company's subsidiaries, namely Pemex Exploración y Producción, Pemex Transformación Industrial, Pemex Perforación y Servicios, Pemex Logística and Pemex Cogeneración y Servicios.

Moody’s said the Baa3 ratings are based on the company's b3 baseline credit assessment (BCA), which indicates the agency’s view of its standalone credit strength, and considers the company's large proved hydrocarbon reserves, which in 2015 amounted to 9,632 million boe, equivalent to 8.1 years of life, as per Pemex; oil production averaging 2,154 mbd as expected by the company for 2016; a dominant role and integrated operations in the energy industry in Mexico; and its position as a major crude oil exporter to the U.S.

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