Moody’s Ratifies CFE’s AAA.mx Rating

Moody’s ratified CFE’s AAA.mx rating citing the state-owned company’s strong government ties and dominant role in the country’s electricity sector. The rating agency highlighted the high likelihood of federal financial support if needed, citing CFE’s strategic importance to Mexico’s economy and social stability. 

Moody’s recognizes CFE’s dominant position in the country’s electricity market, where it generates about 72% of the nation’s energy. CFE holds exclusive rights over electricity distribution and transmission, supported by a robust infrastructure that serves 99.6% of the population. This extensive reach results in highly diversified revenue streams, along with favorable growth prospects for the industry.

However, CFE faces significant financial leverage, driven by its large labor liabilities, lease obligations, and debt incurred to finance infrastructure investments. Additionally, the company remains vulnerable to natural gas price volatility due to its heavy reliance on importing this fuel for power generation. Although CFE’s natural gas hedging program covers 59.1% of daily consumption and partially mitigates this risk, exposure remains a challenge. Additionally, the company will need to carry out an ambitious investment program in the coming years, which, combined with a challenging debt maturity schedule, could put pressure on its liquidity and credit metrics.