Moody’s will put Sheinbaum under the microscope; will review Mexico’s rating

“We hope to learn more information about this and that in the end it will be reflected in the criteria for the 2025 budget that will be published in October. We are also very interested in knowing what the plan for Pemex will be from the sovereign perspective,” said Renzo Merino. , vice president and senior analyst at Moody’s.

He explained that although they have already incorporated the risk of Pemex for public finances, the changes will be important, especially in terms of the management of the debt of the State’s productive company, and the role that the federal government could have in some type of transaction.

“It will be important for us to understand what the final impact is on the government’s balance sheet and debt metrics, (…) especially taking into account this new composition of Congress in Mexico and what this may imply for the possible reforms that may occur in the coming months,” he added.

Renzo Merino mentioned that his current expectation is that Mexico can benefit from the nearshoring process, but if it is observed that conditions are going to change from now on and that these investment prospects do not reach their potential, that could weigh on economic growth and affect both the fiscal consolidation process and the credit profile.

“We believe that by the fourth quarter of this year, we would be in a position to have more information to once again evaluate the level and, in the first instance, the perspective we have of the sovereign,” he noted.

Moody’s last formal rating review took place in mid-2022, but its monitoring of the Mexican government’s outlook and credit profile is ongoing.

On the subject of Pemex, Roxana Muñoz, Moody’s analyst, said that the rating was reduced in February to B3 from B1 with a negative outlook, and one of the conditions to further lower the rating could be the restructuring of its debt, if that is the case. There are losses for investors.

It is estimated that Pemex requires $21 billion in financing needs by 2026, this includes all cash, including debt, the deficit, and in general the company’s operation.