{"id":19572,"date":"2016-04-06T10:45:33","date_gmt":"2016-04-06T15:45:33","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19572"},"modified":"2016-04-06T10:46:06","modified_gmt":"2016-04-06T15:46:06","slug":"debt-spiral-grips-both-pemex-and-mexico","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19572","title":{"rendered":"Debt Spiral Grips Both, Pemex and Mexico"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/04\/05\/debt-spiral-grips-both-pemex-and-mexico\/\" target=\"_blank\">Debt Spiral Grips Both, Pemex and Mexico<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p>It was just a matter of time before Pemex, Mexico\u2019s chronically indebted state-owned oil giant, began dragging down the national economy it had almost single handedly sustained for over 75 years.<\/p>\n<p>The company has been bleeding losses for 13 straight quarters. As of December\u00a031,\u00a0it had $114.3 billion in assets and $180.6 billion in liabilities, a good chunk of it denominated in dollars, leaving a\u00a0<a href=\"http:\/\/www.pemex.com\/en\/investors\/financial-information\/Reporte%20de%20Resultados%20no%20Dictaminados%20%20Archivos\/Annex_4Q15.pdf\" target=\"_blank\">gaping hole\u00a0of $66.3 billion<\/a>\u00a0(<em>negative<\/em>\u00a0equity),\u00a0after having been strip-mined over the\u00a0decades by its owner, the government.\u00a0And given these losses and the equity hole, new credit is becoming harder to come by.<\/p>\n<p>Now\u00a0it seems that Mexico\u2019s worst nightmare is beginning to come true, thanks in no small part to Moody\u2019s Investors Service. The credit rating agency last week downgraded Pemex\u2019s credit rating from Baa1 to Baa3. In November Pemex had a perfectly respectable credit rating of Aa3; now, just six months later, it\u2019s perilously perched just one notch above junk.<\/p>\n<p>\u201cMoody\u2019s believes that Pemex\u2019s credit metrics will worsen as oil prices remain low, production continues to drop, taxes remain high, and the company must adjust down capital spending to meet its budgetary targets,\u201d the\u00a0report said.<\/p>\n<p>That was for Pemex. Now Moody\u2019s also changed the outlook for Mexico\u2019s sovereign rating from stable to negative.<\/p>\n<p>This, coupled with the mounting risk of a credit downgrade, heaps further pressure on a government already struggling to shore up its balance sheet. Hardly helping matters is the fact that oil prices, a key source of government revenues, continue to languish at low levels,\u00a0while the prospect of a massive bailout of Pemex looms ever larger. As if that were not enough, Mexico\u2019s manufacturing industry is beginning to feel a very sharp pinch from weakening U.S. consumer demand.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Debt Spiral Grips Both, Pemex and Mexico It was just a matter of time before Pemex, Mexico\u2019s chronically indebted state-owned oil giant, began dragging down the national economy it had almost single handedly sustained for over 75 years. The company has been bleeding losses for 13 straight quarters. As of December\u00a031,\u00a0it had $114.3 billion in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[13307,195,1782,5660,517,541,588,1775,2174,1673,4255],"class_list":["post-19572","post","type-post","status-publish","format-standard","hentry","category-economics","tag-credit-downgrade","tag-debt","tag-debt-spiral","tag-don-quijones","tag-mexico","tag-moodys","tag-oil","tag-oil-price-collapse","tag-pemex","tag-rating-agency","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19572"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19572\/revisions"}],"predecessor-version":[{"id":19574,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19572\/revisions\/19574"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}