Fitch Upgrades Pemex to BB+ On Stronger Government Support

Fitch Ratings has upgraded PEMEX’s long-term foreign and local currency ratings from BB to BB+, removing them from Rating Watch Positive and assigning a Stable Outlook. The move comes after the state-owned oil company successfully executed a US$9.9 billion tender offer across eight bond series, a deal financed directly by the Mexican government.

The transaction signals a decisive increase in PEMEX’s financial linkage with the sovereign, prompting Fitch to raise its Oversight, Linkage, and Support score. The agency now rates the NOC only one notch below Mexico’s sovereign rating, reflecting “very strong” government direction and control over the company’s financial policy.

The rating upgrade underscores the Sheinbaum administration’s willingness to backstop PEMEX, an entity burdened by US$98.8 billion in debt and persistent operational and financial strains. The company’s standalone credit profile remains at a distressed ‘ccc’, weighed down by weak cash flow, mounting downstream losses, and underinvestment in exploration and production.

This rating follows Moody’s recent upgrade of the NOC from B3 to B1, also driven by strong government backing, highlighting that PEMEX’s creditworthiness is increasingly tied to sovereign support rather than its own fundamentals. Still, Fitch cautions that continued deterioration in operations, marked by declining field development, refinery incidents, and liquidity pressure, will keep the NOC dependent on federal assistance to meet debt service and capital spending needs.

The outlook for further rating action hinges squarely on government policy. An upgrade of Mexico’s sovereign rating or additional structural support, such as an irrevocable guarantee covering more than 75% of PEMEX’s debt, could push the company higher. Conversely, any weakening of government backing, a sovereign downgrade, or failure to effectively address supplier liability would likely trigger a negative rating action.