Moody's cuts Pemex global ratings

Moody's Investors Service said it downgraded Petroleos Mexicanos' corporate family rating and the senior unsecured ratings on the company's notes, as well as the ratings based on Pemex's guarantee, to Ba3 from Ba2.

“These rating actions were based on Pemex's high liquidity risk and increasing business risk as the company faces high debt maturities while it expands its refining capacity and production. Moody's believes that such strategy will generate higher refining operating losses in the short and medium term,” the agency said in a press release.

Moody’s noted that on March 31, Pemex had $2 billion in cash and now has less than $175 million in available committed revolving credit facilities to handle more than $10.8 billion in debt maturities from April to the end of 2022, besides substantial negative free cash flow in the period, driven by insufficient operating cash generation to pay taxes and invest in capital. Pemex depends on the Mexican government.

The outlook is negative.

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