MEXICO CITY (Reuters) – Ratings agency Moody’s (NYSE:) on Friday downgraded the rating of Mexican state oil company Pemex by two notches from B1 to B3, citing deteriorating credit quality.
Moody’s, which has a negative outlook for the company, said it assumes the company is receiving significant government support and that that support could be at risk if Mexico’s financial conditions worsen in 2024.
Pemex is among the world’s largest oil companies, with financial liabilities exceeding $100 billion.
The agency said it expects Mexico’s budget deficit to be significantly higher amid high borrowing costs, social spending and landmark government projects.
Moody’s said it expects the costs of continuing to support Pemex to increase by the time Mexico’s next administration takes office in October.
The downgrade came on the same day the Mexican government ordered the expropriation of a hydrogen plant at the Pemex refinery, which was sold to France’s Air Liquide (OTC:) under the previous administration.