Fitch rates Pemex notes BB+

Fitch Ratings said it assigned long-term ratings of BB+ to Petroleos Mexicanos’ announced senior unsecured debt issuances and exchange offers. Pemex expects to use the proceeds to repay debt, particularly for a cash tender for two notes maturating in 2020. Pemex also announced an exchange offer of up to $2 billion targeting dollar-denominated notes with maturities between 2021 and 2048 to be exchanged for two new notes due in 2031 and 2060. Successful completion of this transaction will further bolster Pemex’s liquidity profile by reducing short-term debt and smoothing medium-term maturities, Fitch said.

Pemex’s ratings reflect the Mexican government’s moderate support-track record for the company given the ongoing heavy tax burden, which has historically limited Pemex’s reinvestment capacity. Total support from the Mexican government toward Pemex in 2019 may have totaled about $9.5 billion after a $5 billion capital injection and provided the company was able to realize 100% of the tax benefits the Mexican government extended to Pemex last year, Fitch said.

The outlook is negative.

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