Tuesday, June 11, 2019
Ratings agency Fitch on June 6 downgraded the bonds issued by state-owned oil firm Pemex to BB+ from BBB-, pushing the rating into ‘speculative grade’ or ‘junk’ territory. The move came a day after Fitch downgraded the bonds of the federal government by one notch, to BBB from BBB+, citing the impact of Pemex’s financial prospects upon those of the government. Moody’s shifted its outlook for the government’s debt from stable to negative but maintained its A3 rating.
- The possibility of further downgrades will be a permanent shadow on the government’s economic actions at least until 2020.
- Any downgrading would have an impact on the borrowing costs of Mexican private sector companies in international capital markets.
- An abrupt fall in oil prices could be a death knell for Pemex, and would deal a significant blow to the exchequer.