Fitch: Pemex unaffected

While Fitch Ratings said it expects no immediate implications on Petroleos Mexicanos (Pemex)'s BBB- rating following the recent announcement of its audited year-end 2005 results, which show a negative equity balance, Pemex's weak equity position highlights the growing need for energy reform in Mexico, which is needed to reduce Mexico's vulnerability to future oil price shocks.

The audited results differ from previously reported preliminary results due to several negative non-cash, income statement and balance sheet adjustments, which in and of itself, should not affect the credit worthiness of Pemex.

Fitch has incorporated the possibility of a negative net worth at Pemex into their BBB- foreign currency IDR for quite some time.

Pemex's negative net worth does not trigger a covenant default; however, certain credit agreements include a disbursement condition that there has been no material adverse change in Pemex's financial condition.

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