MEXICO CITY (Reuters) – S&P Global Ratings on Friday kept the credit rating of Petroleos Mexicanos (Pemex) unchanged after it confirmed the investment grade rating of Mexico’s government, which serves as the benchmark for the Mexican state oil firm’s creditworthiness.
The ratings agency said it affirmed Pemex’s global “BBB” foreign currency and “BBB+” local currency ratings, and maintained its negative outlook, mirroring the assessment it had made of Mexico’s own creditworthiness.
S&P said weak oil prices and challenges in increasing production volumes had eroded Pemex’s key credit metrics, exacerbating the company’s liquidity pressures.
Still, the agency maintained Pemex’s stand-alone credit profile at ‘ccc+’ on the grounds the government will keep up its financial support, and that Pemex will have access to the debt market and bank funding to refinance its short-term debt.
President Andres Manuel Lopez Obrador has vowed to revive the fortunes of Pemex, which has suffered years of declining crude output and has financial debts of some $110 billion.
Still, the company did post a profit in the third quarter, boosted by foreign exchange gains.
S&P argues that Pemex’s struggles could increase the risks for Mexico’s sovereign creditworthiness.
(Reporting by Bengaluru Newsroom; Writing by Dave Graham; Editing by Will Dunham)