Thirteen dead in clashes between police and criminals in western Mexico

The Moody’s agency lowered this Monday the rating of the state-owned Petróleos Mexicanos (Pemex) from Ba3 to B1 due to its high debt maturities and the need for external financing.

Last week, the rating agency also reduced Mexico’s rating from Baa1 to Baa2, arguing that economic and fiscal trends “will continue to reduce” the country’s credit profile, which also influenced Pemex’s downgrade.

The review of Pemex’s ratings “was motivated by the downgrade of Mexico’s rating, given the critical importance of the government’s financial strength and support in evaluating the oil company’s credit profile due to its high liquidity risk,” the rating agency said in a statement.

The agency also considered Pemex’s high debt maturities for the 2022-2024 period, its need for external financing, and the oil company’s limited access to capital markets due to high intrinsic credit risk.

The rating agency also warns that the company will not be able to increase its oil production and reserves due to the lack of resources to invest in exploration and infrastructure.

The Mexican oil company maintains a heavy financial debt that at the end of 2021 amounted to 108,000 million dollars.

Pemex must increase its investments to reverse a prolonged decline in its oil production, which fell from an average of 3.4 million barrels a day in 2004 to 1.7 million today.

The government of President Andrés Manuel López Obrador, who took office in 2018, has sought to alleviate the finances of the main Mexican state-owned company, which it considers a bastion of national sovereignty.

Mexico, the second largest economy in Latin America after Brazil, was hit hard by the pandemic with a GDP slump of 8.4% in 2020.

In 2021, the economy rebounded 5% and for this year the analysts who survey the central bank month by month expect an expansion of 1.8%.

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