Comision Federal de Electricidad, PEMEX, And Subsidiaries Local Currency Ratings Cut To #A-# On Change In SP Criteria

Stocks and Financial Services Press Releases Tuesday December 19, 2017 09:17
MEXICO CITY--19 Dec--S&P Global Ratings
  • On Dec. 18, 2017, S&P Global Ratings lowered its local currency long-term and short-term sovereign credit ratings on the United Mexican States to 'A-/A-2' from 'A/A-1'. At the same time, affirmed its 'BBB+/A-2' foreign currency long-term and short-term sovereign credit ratings on the United Mexican States. The outlook on the long-term ratings remains stable.
  • As a result, we're lowering our local currency rating, on state-owned companies Comision Federal De Electricidad (CFE), Petroleos Mexicanos (Pemex), and Pemex's subsidiaries PMI Trading, PMI NASA, and MEX GAS SUPPLY S.L. to 'A-' from 'A'. We're also lowering all Pemex's issue-level ratings to 'A-' from 'A'. Additionally, we're lowering the local currency senior unsecured rating assigned to CFE to 'A-' from 'A'.
  • At the same time, we are affirming our 'BBB+' foreign currency long-term ratings on CFE and Pemex. The stable outlook on both companies mirrors that on the sovereign.

MEXICO CITY (S&P Global Ratings) Dec. 18, 2017--S&P Global Ratings lowered its local currency ratings on government-related entities (GRE) CFE and Pemex and its subsidiaries (PMI Trading, PMI NASA, and Mex Gas Supply, S.L.) to 'A-' from 'A'. We're also lowering all Pemex's issue-level ratings to 'A-' from 'A'. At the same time, we affirmed our 'BBB+' foreign currency ratings on CFE and Pemex. The outlook remains stable.

The rating action does not reflect any deterioration of our view of Mexico's sovereign creditworthiness. Instead, it reflects recent revisions to S&P Ratings' methodology for sovereign ratings.

On Dec. 18, 2017, S&P Global published a revised Sovereign Rating Methodology to replace the previous version published on Dec. 23, 2014. The revised methodology modifies our existing criteria for sovereign ratings. Among the modifications, we have reduced the potential gap between foreign and local currency ratings to only one notch from two. Following the new methodology, we have lowered the local currency rating on Mexico to reflect a gap of one notch with the foreign currency rating.

The ratings on CFE and Pemex reflect our view that there is an almost certain likelihood of extraordinary support from the government to both issuers in the event of financial distress. We believe that PEMEX plays a critical role for Mexico because it provides about 16% of Mexico's public-sector revenues through taxes and duties, and it has an integral link to the government, given the latter's full ownership of the company.

The ratings on PMI Trading, PMI NASA, and Mex Gas Supply, S.L. mirror those on PEMEX, given that we view them as core subsidiaries and that they would benefit indirectly from the Mexican government's potential extraordinary support to PEMEX.

CFE plays a critical role for the government, given its monopoly over the transmission and distribution of electricity in the country. We also expect the company to be the leading player in the power generation business for the foreseeable future. CFE has an integral link with the government, as Mexico is CFE's sole owner and will continue to have tight control over it.


Latest Press Release

Fitch Ratings: PTT#s Purchase of Murphy Oil#s Malaysia Assets to Raise Output, Reserves

PTT Exploration and Production Public Company Limited's (PTTEP) plan to acquire Murphy Oil Corporation's (BB+/Stable) business in Malaysia will immediately increase the group's reserves and production profile, Fitch Ratings says. In our view, the...

KBank teams up with eight partners to launch 2nd K SME Good to Great Nurture growth of food manufacturing, cosmetics and retail businesses with THB1-million prize money up for grabs

KBank gears up for the second-year K SME Good to Great project to promote food manufacturing, cosmetics and retail businesses. The event features business courses, seminars, business boot camps and one-on-one advisory service. The strongest 10...

KTC joins hands with seven beauty brands to rejuvenate and enhance online members skins in preparation of the summer.

"KTC" or Krungthai Card Public Company Limited, jointly with seven leading online beauty business alliances, including "Biotherm", "Kiehl's", "Lancome", "Urban Decay" within L'Oreal Luxe along with "Beauticool", "Craze", and "Konvy" provide members up to...

Photo Release: EXIM Thailand Organizes EXIM White Day 2019 Pledging to Fight Against Corruption

Mr. Adul Chotinisakorn (third right), Chairman of the Corporate Governance and Social Responsibility Committee of Export-Import Bank of Thailand (EXIM Thailand), jointly with members of the Board of Directors, Management and staff of EXIM Thailand,...

PEA and SCB join forces to unlock PEA Hero Platform with PEA Energy Intelligence to extend digital lending experience for PEA business network

In a bid to bring the digital ecosystem to the energy industry, the Provincial Electricity Authority (PEA) has collaborated with Siam Commercial Bank (SCB) to develop PEA Energy Intelligence, a fully integrated digital service to help manage business and...

Related Topics