Mexico City — Mexican President Andres Manuel Lopez Obrador said on Friday that his government would keep investing in state oil company Pemex, which is on the verge of losing its investment grade rating.
Fitch Ratings downgraded roughly $80 billion of bonds to speculative grade – or “junk” status – with a second downgrade seen coming soon from Moody’s, an action tantamount to loss of an investment grade rating. This could cripple the president’s energy agenda and imperil Mexico’s creditworthiness.
Under Lopez Obrador’s predecessor, Enrique Pena Nieto, Pemex’s financial debt surged by 75% to $106.5 billion. Some $85 billion of this debt consists of U.S.-dollar denominated bonds that are widely held and traded on world markets.
If Pemex were to lose its investment grade rating, it would become the largest “fallen angel” – the term for a company that is stripped of its investment grade rating – in history by a factor of two.
“It is very unfair,” Lopez Obrador said at his regular morning conference over the recent decisions taken by ratings agencies. “I hope they would be more careful in their analysis, more professional, more objective.”