Fitch sinks Pemex further; downgrades CFE in line with Mexico rating

Fitch Ratings reduced the credit rating of Pemex from ‘BB- to’ BB ‘, sinking the Mexican oil company in the investment speculative degree, better known as “Junk bonds“, with a stable perspective.

“The ratings of Pemex are three levels below those of Mexico, as a result of the continuous deterioration of its independent credit profile to ‘ccc-‘ in the midst of the recession in the world oil and gas industry, the lower assumptions of the oil price of Fitch and the weakening of the credit relationship between Mexico and Pemex, “Fitch explained.

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The agency also lowered the rating of the CFE to ‘BBB-‘ from ‘BBB’, in line with the adjustment it made to Mexico’s rating this week.

This is the second adjustment to the Mexican oil company so far this month by Fitch, given the doubts that the company’s viability generates.

The agency also downgraded CFE’s rating to ‘BBB-‘ from ‘BBB’, in line with the adjustment it made to Mexico’s rating this week.

The agency also downgraded the companies IEnova and Cometa, given a higher risk in their credit profile.

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Meanwhile, it also adjusted Liverpool’s rating outlook from stable to positive after the downgrade of Mexico’s note.

“The downgrade of Mexico’s sovereign rating reflects the economic shock represented by the coronavirus pandemic, which will lead to a severe recession in Mexico in 2020. A recovery from the second half will likely be slowed by the same factors that have hampered recent economic performance, which has delayed that of rating and income level, “Fitch said.

In this sense, he explained that Fitch considers that Pemex’s corporate governance is weak given the high level of government interference in changes in the company’s strategy, financing and administration with changes in administration.

“Pemex is also exposed to social and community relations in its area of ​​influence, as it has been affected by pipeline ruptures,” he said.

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