Exclusive: Pemex Needs to Pay Its Own Debt to Improve Its Credit Rating, Says Moody’s

In an interview with Bloomberg Línea, Moody’s analyst Roxana Muñoz stated that Pemex needs stronger metrics than its current ones in order to improve its credit rating

Petróleos Mexicanos (Pemex)'s HQ in Mexico City, Mexico
October 04, 2023 | 12:25 PM

Bloomberg Línea — Petróleos Mexicanos, the state-owned oil company known as Pemex, needs a financially liquid position to cover its own debt for Moody’s to raise its credit rating. In an interview with Bloomberg Línea, Roxana Muñoz, Moody’s analyst in charge of Pemex, mentioned that the world’s most indebted oil company, currently holding a B1 credit rating with a negative outlook, needs stronger financial figures.

“To raise the rating, we would need to see stronger metrics: Pemex with a comfortable financial position and available liquidity to pay off their debt,” she stated. Moody’s estimates that Pemex, which carries a financial liability of $110.5 billion, will need $13.8 billion to cover its next year’s requirements, but its cash flow won’t exceed $10.3 billion.

Before its credit rating can be upgraded, Pemex needs to improve its currently negative credit outlook, which will depend on the strategy presented by the next government, to be voted on by Mexican citizens during the electoral process in July 2024.

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The administration of President Andrés Manuel López Obrador has come to Pemex’s rescue with multiple capital injections and reductions in its tax burden, allowing the company to cover its debt maturities year after year, even in a high oil price environment. This year, Pemex even returned to the financial markets with a $2 billion bond issuance and received a $3.89 billion injection from the Mexican government.


The most recent support action by the AMLO government, as the president is known, came in September with a budgeted financial surplus for Pemex of $8.2 billion, in addition to the reduction of the Shared Profit Tax (DUC) from 40% to 35%, as per the 2024 Federal Budget Proposal, which still needs to be approved by the Chamber of Deputies.

Moody’s maintains communication with Pemex Although Pemex has managed to increase its production to 1.9 million barrels of crude oil and gas condensates per day after 20 years of decline, according to the U.S. Energy Information Administration, Moody’s only considers the extraction of crude oil, which declined in 2022.

“Crude and condensates are not the same because you can’t sell crude and condensates at the same price. There’s a price differential, even when refined, there are certain differences,” Muñoz explained.


Pemex’s metrics have been a point of contention between Pemex, the Mexican government, and Moody’s. Since 2021, when the agency downgraded Pemex’s rating to a level considered junk bond status, Mexican authorities criticized the agency, starting with the company’s CEO, Octavio Romero Oropeza.

In July 2023, during an interview with Bloomberg Línea, Rocío Nahle, Chair of Pemex’s Board of Directors and Secretary of Energy, criticized Moody’s analysis and the decision to put the rating on a negative outlook without considering the $15 billion investment in the Dos Bocas refinery, in addition to reevaluating the service contract with the credit rating agency.

When asked about this, Muñoz commented that Moody’s rating does incorporate all aspects of investments, and the firm uses publicly available information from audited financial statements, as well as the Form 20F that Pemex submits to the Securities and Exchange Commission (SEC). “We have a relationship with the company, like any other company. Yes, there is communication with them,” said the analyst.

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