Mexico City, (EFE) .- Fitch Ratings placed PEMEX’s credit ratings under positive observation after the announcement of a financial operation for 9.5 billion dollars, driven by the federal government, which could significantly improve its profile.
The agency reported in a statement that the non -compliance notes of the IDR (in English) of PEMEX long -term in foreign and local currency of Pemex are maintained in ‘B+’, but now under the Denomination Rating Watch Positive (RWP, in English).
In his report, Fitch indicated that if the operation is successfully executed-denominated P-CAP-the note could climb up to two steps to the category ‘BB’.
Fitch’s announcement occurs hours after the Treasury confirmed in a statement that will issue pre-capitalized notes to strengthen the liquidity of the company and attend its short-term debt maturities, for around 9.5 billion dollars, according to Fitch in his note.
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According to Fitch, this operation reflects a “tangible commitment” of the Government with Pemex and opens the door to improve the evaluation of the subfactor “SUPPORT precedents” in its criteria for government -related entities (GRE, in English).
If concretized, the subfactor would go from “not strong enough” to “strong”, which would imply an automatic two -level improvement in the rating.
Likewise, the qualifier stressed that the recent legislative measures – which allow Pemex to share indebtedness limits with the Treasury -, together with increasing supervision over their financial decisions, could lead to a new positive review of its qualification, by raising the subfactor of “decision -making and supervision” of “strong” to “very strong”.
Persistent risks
However, Fitch maintained his evaluation of the individual credit profile (PCI) of Pemex in ‘CCC-‘, citing concerns about its high debt, estimated at 101,500 million dollars to the first quarter, low cash flow, operational losses and a fragile financial structure.
The qualifier also warned of the operational deterioration due to lack of investment, environmental and labor liabilities, and the negative impact of ESG history (environmental, social and governance factors) in its ability to attract capital.
In this last aspect, he pointed out that multiple fires, polluting gases emissions and accidents that have caused injuries and even the death of workers are factors that exert additional pressure on the Pemex qualification.
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Financial support is given in compliance with the Federal Public Debt Law and other legal provisions, according to the Treasury, and is part of a broader strategy of the Executive to guarantee energy security and national economic development.
“The Government of Mexico reaffirms its commitment to the prudent management of public finances and the strengthening of state productive companies, as engines of national development,” said the agency in an earlier statement.
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