S&P downgrades Pemex

S&P said it downgraded its global scale foreign currency and local currency ratings on Petroleos Mexicanos (Pemex) to BBB and BBB+ from BBB+ and A-, respectively, and maintained the negative global scale rating outlook, following a similar action on the sovereign.

In addition, S&P said it affirmed the national scale mxAAA/mxA-1+ issuer credit ratings on the company.

The outlook on the national scale rating is stable.

S&P also downgraded the issuer credit ratings on Pemex’s subsidiaries to BBB (foreign currency) and to BBB+ (local currency) from BBB+ and A-, respectively.

“Lower oil and natural gas prices anticipated over the next two years will jeopardize the execution of Pemex’s business plan, because weaker cash flow will limit the ability to fully fund its multi-annual capital investment needs,” S&P said in a news release.

“In this context, we see limited room for Pemex to improve its very weak credit metrics any time soon.”

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