{"id":39640,"date":"2018-10-24T07:46:42","date_gmt":"2018-10-24T12:46:42","guid":{"rendered":"http:\/\/olduvai.ca\/?p=39640"},"modified":"2018-10-24T07:46:42","modified_gmt":"2018-10-24T12:46:42","slug":"defiant-energy-policy-of-mexicos-president-elect-rattles-moodys-and-fitch","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=39640","title":{"rendered":"Defiant Energy Policy of Mexico\u2019s President-Elect Rattles Moody\u2019s and Fitch"},"content":{"rendered":"
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Defiant Energy Policy of Mexico\u2019s President-Elect Rattles Moody\u2019s and Fitch<\/a><\/h3>\n<\/header>\n
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But it\u2019s going to be tough; he\u2019ll need more than luck to pull it off.<\/strong><\/p>\n

Moody\u2019s has rated the $2 billion of senior unsecured notes due 2029 that\u00a0Mexico\u2019s state-owned oil company Pemex is in the process of issuing one notch above junk. Pemex is offering to pay a coupon interest rate of 6.5%. In its report<\/a> on Friday, Moody\u2019s blamed the company\u2019s \u201cweak liquidity, a heavy tax burden and the resulting weak free cash flow, high financial leverage and low interest coverage; and challenges related to crude production and reserve replacement.\u201d<\/p>\n

Moody\u2019s is also worried about the large amounts of debt coming due in 2020 and beyond. And Pemex will continue to be \u201cdependent on debt capital markets to fund negative free cash flow,\u201d it said.<\/p>\n

Fitch Ratings downgraded<\/a> the outlook for Pemex\u2019s debt from stable to negative amid concerns about the incoming government\u2019s proposed energy policies. It\u00a0rates Pemex three notches above \u201cjunk\u201d (BBB+), but only because the company is state-owned. Its standalone credit profile \u2014 if Pemex were not backstopped by the Mexican state \u2014 is\u00a0<\/em>junk, seven notches into junk (CCC).<\/p>\n

Fitch has also warned<\/a>\u00a0earlier that if Pemex\u2019s credit rating drops, so, too, will Mexico\u2019s sovereign debt rating. Even a small deterioration in credit risk could exact a heavy toll on both the company and the country.<\/p>\n

<\/ins>The outlook revision to negative from stable \u201creflects the increased uncertainty about Pemex\u2019s future business strategy coupled with the company\u2019s deteriorating standalone credit profile,\u201d Fitch said in its report.<\/p>\n

Fitch\u2019s downward revision was cited by analysts as one possible factor in the fall of the peso last week to its lowest level in over a month. CI Banco analyst James Salazar said<\/a> that Fitch\u2019s Pemex assessment is a reminder that the company\u2019s \u201cfinances should continue to be handled with great caution so as not to cause additional imbalances that will increase its debt.\u201d<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Defiant Energy Policy of Mexico\u2019s President-Elect Rattles Moody\u2019s and Fitch But it\u2019s going to be tough; he\u2019ll need more than luck to pull it off. Moody\u2019s has rated the $2 billion of senior unsecured notes due 2029 that\u00a0Mexico\u2019s state-owned oil company Pemex is in the process of issuing one notch above junk. Pemex is offering […]<\/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":[3],"tags":[195,5660,2460,3108,517,541,2174,4255],"class_list":["post-39640","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-debt","tag-don-quijones","tag-energy-policy","tag-fitch","tag-mexico","tag-moodys","tag-pemex","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39640","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=39640"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39640\/revisions"}],"predecessor-version":[{"id":39641,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39640\/revisions\/39641"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}