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Bond Market News
Pemex Downgrade Less Likely in 2022 on Oil Rally, Says Moody’s
February 9, 2022
Mexico’s Pemex is less likely to get downgraded in 2022 as per Moody’s, thanks to recent government aid, higher crude oil prices and stabilizing production. Moody’s analyst Nymia Almeida said, “Debt must have declined last year because of the payments by the government, production has stabilized and prices are very solid, so they should be less of a burden — at least, this year… I think the amount of money that they may need this year will be less”. Pemex, currently rated Ba3 by Moody’s has been at risk of a downgrade after it announced in December that it would stop exporting crude by 2023, as part of the government’s objective to produce all of Mexico’s fuel domestically. The move was considered to reduce Pemex’s ability to generate dollar/hard currency revenue to repay foreign debt and also make Mexico a net importer of crude as Pemex does not have the volumes to meet Mexico’s demand.
Pemex’s dollar bonds were flat, with its 6.5% 2029s trading at 101.7, yielding 6.2%.
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