June 6, 2019
By Stefanie Eschenbacher
MEXICO CITY (Reuters) – Fitch on Thursday became the first major ratings agency to downgrade the debt of Mexican oil company Pemex to “junk” status, in a major setback for President Andres Manuel Lopez Obrador’s plans to revive the struggling state-run firm.
Fitch changed Pemex’s credit rating from investment grade to speculative grade, or “junk”, with a negative outlook, a classification it said would apply to about $80 billion worth of outstanding bonds.
The new rating of BB+, from BBB-, follows the downgrade of Mexico’s sovereign debt to BBB from BBB+ a day earlier.
A second downgrade by Moody’s, which rates the bonds one notch above junk, could result in as much as $16 billion of forced selling by investors whose mandates stipulate they must hold bonds of investment-grade quality.
(Reporting by Stefanie Eschenbacher; additional reporting by Anuron Kumar Mitra in Bengaluru; Editing by Lisa Shumaker)