Moody’s cuts indebted oil firm Pemex’s rating by two notches to B3

MEXICO CITY (Reuters) – Ratings agency Moody’s (NYSE:) on Friday downgraded its rating for Mexico’s state-owned oil firm Pemex by two notches to B3 from B1 previously, citing poorer credit quality.

Moody’s, which has a negative outlook for the firm, said it assumed the company was receiving high government support, and that this support could be jeopardized by a 2024 deterioration of Mexico’s fiscal conditions.

Pemex is among the world’s most indebted oil companies, with financial liabilities exceeding $100 billion.

The agency said it expected a considerably higher fiscal deficit in Mexico on the back of high borrowing costs, social spending and emblematic government projects.

Moody’s said it expects costs for further supporting Pemex to have increased by the time Mexico’s next administration comes into power in October.

The downgrade comes the same day Mexico’s government ordered the expropriation of a hydrogen plant at a Pemex refinery that had been sold to France’s Air Liquide (OTC:) under the previous administration.