Fitch reduces Pemex's note and leaves it at the edge of the speculative note



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Fitch Ratings downgraded its credit rating on Tuesday PetrĂ³leos Mexicanos (Pemex) two steps to & # 39; BBB – & # 39; of & quot; BBB + & quot ;.

He also maintained the negative outlook, which implies a possible further downgrade of the note.

The lowering of the Pemex note implies that it has fallen from eight to 10 on the Fitch scale and is about to fall in BB & # 39; which is a speculative grade.

"The decline in Pemex's ratings reflects the continued deterioration of Pemex's individual credit profile."

The rating agency's ruling comes despite the government announcing on Monday that it will implement a series of actions aimed at easing the tax burden of PetrĂ³leos Mexicanos by creating a new tax regime for the state's productive capacity.

"In Fitch's view, the measure recently announced by the Mexican government to support Pemex is not enough to offset the recent deterioration in the company's individual credit profile."

The ratings & # 39; BBB & # 39; indicate a moderate risk of default. However, changes in circumstances or economic conditions are more likely to affect repayment capacity in a timely manner than in the case of financial commitments that are in a higher rating category, according to Fitch Ratings.

Likewise, it reduced the long-term rating on the national scale, remaining in & # 39; AA & # 39; of & quot; AAA & quot ;.

Among the factors that the rating agency has indicated as keys to changing the ratings are the transfers from Pemex to the government, which, he said, remain high in relation to cash flow generation, in addition to the government's moderate support for the oil company, which indicated by modest capital contributions.

He said he estimates hydrocarbon production and reserves will continue to decline over the medium term and potentially stabilize after 3 to 5 years due to the fact that the current level of investment is insufficient to replenish reserves.

"Fitch estimates that Pemex will require an annual investment of approximately $ 15 billion to $ 18 billion to replace reserves."

He said that Pemex's corporate governance is weak due to "the high degree of interference by the Mexican government in the strategy, financing and rotation of the company's administration in changes of government."

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