The CEO of Petróleos Mexicanos (Pemex), Octavio Romero Oropeza, said he strongly disagrees with Moody’s for lowering the state company’s credit rating from Ba2 to Ba3.
Yesterday, the credit risk rating agency announced its decision to downgrade Pemex due to the high levels of debt maturity, as well as a lower operating flow due to the expansion of its refining business, which generates large monetary losses.
“The arguments that were made known to us yesterday morning by Moody’s for this decision to lower the rating to Pemex, are fundamentally based on three issues: the acquisition of Deer Park, the construction of the Dos Bocas refinery and the payment of the debt ”.
To which Romero Oropeza stated that, despite being given arguments and Moody’s was asked to review it to give it more elements to change its criteria, “they refused.” So their disagreement has to do with two aspects: technical and methodological, as said by the CEO at the conference to present financial and operating results for the second quarter of the year.
Romero Oropeza indicated that it was explained to Moody’s that all the resources to solve these three aspects will come from the federal government.
“It seems to us an action of lack of professionalism on the part of this rating agency, lack of ethics, in short, something even shameful, because we never knew what was the attachment they had to the planned methodology, we do not know how they calculated this decision “.
Also read: Dos Bocas and Deer Park refineries, a burden for Pemex: Moody’s
On the other hand, Nymia Alemeida, senior analyst at Moody’s, in response to what was commented by Romero Oropeza, responded that all the positive aspects of the company were considered, such as the replacement of oil reserves and stability in crude production.
In addition, The downgrade did not consider the purchase of the Deer Park refinery in Texas, nor the construction of the Dos Bocas refinery.For the rating agency, it is clear that the federal government will provide the resources, he specified in a virtual conference.
But capital investment and tax needs, even with the support of the federal government, will continue to cause a deficit in free cash flow, the analyst said.
Government support will continue, he added, but so will large losses in refining., along with Pemex’s inability to make investments with its own resources.
Regarding the observations of Octavio Romero, about contradictions in the methodology applied by Moody’s, Nymia Almeida said that it was followed correctly, not only with regard to oil companies, a liquidity analysis was also carried out, both factors were the basis for rating downgrade.
Similarly, the rating agency does not see Pemex letting its financial commitments pay, it will only have difficulties, because if there were a situation where it was impossible to comply, the rating would not be Ba3, it would be much lower, the analyst explained.
Meanwhile, the final position this morning of the director of the State productive company was to give certainty, “I want to express to our investors not to worry that Pemex will never fail to honor its debt commitment, we have the backing of the federal government ”.
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