Pemex to Remain A Fiscal Challenge for Next President of Mexico

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(S&P Global Ratings, 15.Apr.2024) — Mexico’s relationship with state-owned oil giant Pemex will remain a fiscal challenge for the country’s next presidential administration, said S&P Global Ratings in “Pemex Will Remain A Fiscal Challenge For Mexico’s Next President.” The national elections in June encompass the presidency and both chambers of Congress, and the new government’s fiscal policy path will be key to sovereign creditworthiness.

“Our sovereign ratings assume a limited increase in debt to GDP for the government and Pemex in coming years, consistent with Mexico’s track record of cautious fiscal execution across multiple administrations,” said S&P Global Ratings credit analyst Lisa Schineller.

But given the weak state of Pemex’s finances and the expectation that any government will continue to back its debt repayment, the potential for pressure on the sovereign rating remains. And the issuer credit rating on Pemex remains reliant on the sovereign credit rating.

“How the next administration tackles Mexico’s overall fiscal trajectory, chooses to support Pemex, addresses policy in the energy sector, and organizes Pemex’s management will likely affect our ratings on both Mexico and Pemex,” said Schineller.

Meanwhile, local governments appear to have adjusted to a weaker Pemex, with a low share of oil revenue in their federal transfers.

This report does not constitute a rating action.


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