Mexico’s struggling state oil company Pemex on Thursday had its credit rating cut to near junk value by Moody’s Investors Service, according to Bloomberg.
Pemex has been performing poorly for years with decreasing output and increasing debt and it is in the process of surrendering its monopoly position in Mexico’s oil industry as part of the government’s efforts to reform the energy sector.
But the steep global decline in the price of oil has hampered that process, too, as recent auctions of oil and gas rights – offshore and on land – have attracted lukewarm bidding even with the field opened up to private and foreign companies.
Moody’s – one of the big three rating agencies along with Fitch Group and Standard & Poor’s – lowered Pemex two levels from Baa1 to Baa3.
Moody’s also downgraded Mexico’s national economic outlook from stable to negative, partly because it sees the government could be on the hook for sustaining Pemex through these turbulent times.