& Tobago

Very usefull links


News links




Dow Jones

Oil price



Views and News




AMLO's gamble on PEMEX gets serious warning from ratings agencies

The focus on Pemex helps put future fiscal accounts at risk, the agencies say.

- Fitch cut credit rating to BBB from BBB+ on public finances
- Moody's shifts outlook on A3 rating to negative from stable

By Nacha Cattan / Bloomberg

Petroleumworld 06 06 2019

President Andres Manuel Lopez Obrador's plan to rescue the heavily indebted state oil company suffered a decisive blow Wednesday, with two ratings agencies warning he's only hurting Mexico's finances.

In almost simultaneous announcements late Wednesday, Fitch Ratings cut Mexico's credit rating to BBB from BBB+, while Moody's Investors Service shifted the outlook on its A3 rating to negative. Both warned that Pemex's ballooning debt, which already made the company the world's most indebted oil producer, is a risk to public finances amid weaker growth.

Just this year, the administration of AMLO, as the president is known, has presented three rescue packages for Pemex, formally known as Petroleos Mexicanos. But investors say Mexico should throw less money at a company with limited ability to boost crude output and perennial inefficiencies, and work to increase private investment in the industry, which the president has halted.

“The government's fiscal plans were always inconsistent. AMLO wanted to spend on his plans, and then pay through savings that were always too ambitious,” said Daniel Kerner, Latin America analyst at Eurasia Group. “Then add bad plans for Pemex, and the numbers don't add up. The question now will be how they respond, because AMLO cares about stability."

Read More: Mexico to Kick Off Refinery Project as AMLO Rallies Nation

Instead of reining in spending on Pemex, Lopez Obrador is building a $7.7 billion oil refinery at the same time the economy is expected to grow as little as 0.8% this year, according to the central bank. The refinery has helped push Energy Ministry spending up by 364% in real terms in the first four months of 2019 compared to a year ago, even as the government is cutting expenditures at most ministries. The focus on Pemex helps put future fiscal accounts at risk, the agencies say.

"Lower growth, together with changes to energy policy and the role of Pemex, introduce risks to Mexico's medium-term fiscal outlook," Moody's stated in its decision to shift its outlook. "Unpredictable policy-making is undermining investor confidence and medium-term economic prospects."

Mexico's peso fell on the news, dropping 0.8% to 19.7294 per dollar at 8:25 p.m. New York time.

Read More: Mexico Peso Tanks on Double Whammy From Ratings, Trade Talks

Fitch, which left Mexico's credit rating two notches above junk level, said it now sees the country growing 1% this year, making it harder to boost revenues.

"In Fitch's view, meeting fiscal targets will become more difficult heading into 2020 and could result in tighter policy that creates a further headwind to growth," the rating agency said in its statement.

— With assistance by Amy Stillman, and Justin Villamil

Story by Nacha Cattan from Bloomberg. 06 05 2019


We invite you to join us as a sponsor.

Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.




Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions as the source.

Other stories you have to get authorization by its authors. Internet web links to are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1



Editor & Publisher: Elio Ohep/
Contact Email:

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld ™  / Elio Ohep - All rights reserved


This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.