Mexico finance ministry denies Pemex weighs on sovereign rating

Mexico’s government does not see federal oil and gas giant Pemex's finances posing a risk to the sovereign debt rating, according to a finance ministry official.

Reporting on Mexico's public finances via the ministry’s YouTube channel, finance undersecretary Gabriel Yoro said whatever extraordinary help the government would provide would not impact the country’s debt rating.

“Mexico has all its ratings with a stable perspective,” Yoro said. "We do not see a possibility of changes right now, as the biggest ratings are closed or stabilized: Fitch, S&P, and Moody's."

Concerns have resurfaced in recent months that Pemex’s US$100bn debt could burden public finances. Fitch Solutions said earlier in January that the company was the single most important risk factor for Mexico's financial health.

But in another report from late last year, Fitch also said the company has been unable to stay its financial course despite high oil prices due to the government taking the lion's share of its revenues.

During the report, Yoro said the ministry would help the company through a set of policies, including lower taxes and refinancing, but did not mention new direct transfers.

CEO Octavio Romero Oropeza said late last year that the company was asking the finance ministry for direct support this year, given that the calendar of debt repayments looks to be burdensome, especially in Q1.

Yoro, however, focused on what the ministry has already done for Pemex, specifically reducing its shared profit tax from 65% to 40%, which would be maintained in 2023 and 2024.

According to Yoro, the finance ministry has also helped Pemex refinance its debt commitments several times, pushing them past 2025, while high international oil prices will help the company service its commitments.

"Pemex is one of the greatest assets the federal government has, and we still have a significant flow of oil revenues, which are used in the national budget to face the different challenges the country has in terms of economic and social policy," Yoro said.