NEW YORK, July 12 ― Ratings agency Moody's yesterday revised its outlook on Mexican state oil giant Pemex to “stable” from “negative”, reflecting its ratings on Mexico's outlook.
Moody's downgraded Pemex's ratings to B1 from Ba3, after downgrading Mexico's rating, citing the importance of the government's financial strength and the assessment of Pemex's credit profile due to its high liquidity risk.
“Pemex has weak liquidity and is highly dependent on government support... Moody's estimates that Pemex will have substantial negative free cash flow in the next 12-18 months, driven by insufficient operating cash generation to pay interest expenses, taxes, and capital spending,” the agency said in a statement.
Last week, S&P Global Ratings revised Pemex's outlook to stable from negative, after it reviewed Mexico's long-term outlook. It also raised Mexico's long-term outlook to stable from negative.
According to S&P, while high crude oil prices are improving Pemex's credit metrics, the company's weak liquidity continues to affect the assessment of its standalone credit profile.
Crude prices have climbed to multi-year highs this year following Russia's invasion of Ukraine and subsequent sanctions on Moscow, which disrupted an already tight market. ― Reuters
