Fitch Boosts Pemex Rating to BB+, Closer to Investment Grade
Fitch Ratings has boosted Pemex's credit rating, moving it closer to investment grade. The upgrade, from BB to BB+, reflects the Mexican government's growing support for the state-owned oil and gas company. Adriana Eraso, Fitch's director for Latin America, noted the strengthening link between Pemex and the government.
The upgrade follows Pemex's successful $9.9 billion debt offer, backed by the Mexican government. Fitch also cited the government's role in guaranteeing a significant portion of Pemex's debt, which has been crucial in bolstering the company's creditworthiness. Despite maintaining a 'stand-alone' rating of CCC, indicating high financial risk without government support, Pemex's Overall Linkage Score (OLS) improved, leading to the upgrade.
To further enhance Pemex's rating, Fitch suggests increasing Mexico's sovereign rating, upgrading Pemex's stand-alone rating, or the government guaranteeing 75% of Pemex's debt. The agency expects Pemex to retain its new BB+ rating in the near future. This upgrade comes just a month after Fitch's previous raise, a faster process than typical annual or bi-annual upgrades. Pemex aims to achieve fiscal solvency by 2027 as part of its 10-year strategic plan.
Pemex's rating upgrade signals improved market confidence in the company, driven by the Mexican government's robust support. With its new BB+ rating, Pemex is better positioned to access global capital markets and navigate its financial challenges.
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