Moody’s Places PEMEX on Upgrade Review After Strategic Plan

Moody’s Ratings has placed PEMEX under review for a potential upgrade, citing a stronger commitment from the Mexican government to stabilize the state oil company’s finances through a new strategic plan. The decision comes just weeks after the NOC and the federal administration announced the Strategic Plan 2025–2035, a package designed to reduce the company’s towering debt, improve liquidity, and address overdue payments to suppliers.

The review, announced on Aug. 18, covers PEMEX’s B3 corporate family rating, its baseline credit assessment, and senior unsecured notes. Also under review are the ratings tied to PEMEX Project Funding Master Trust. Previously, Moody’s had maintained a negative outlook for the NOC and its associated entities, reflecting mounting financial stress.

The shift marks one of the most significant signs in years that credit agencies view PEMEX’s long-troubled balance sheet as stabilizing, though the turnaround remains contingent on execution.

Government Commitments Underpin Review

At the core of Moody’s move is the Mexican government’s decision to reinforce its financial support for PEMEX. The company, together with the Finance and Energy ministries, is working to roll out a two-pronged strategy. The US$12 billion P-Cap Transaction is designed to tackle outstanding accounts payable and short-term liabilities, normalizing working capital by 3Q25. The Investment Fund for PEMEX, which is expected to partially fund upstream projects, is aimed at attracting private sector participation while ensuring the NOC can keep up with supplier obligations and future exploration spending.

Moody’s said the transactions, if closed as expected in 3Q25, could improve PEMEX’s debt amortization profile and overall liquidity. The agency noted that the federal government is likely to unveil additional measures in the coming two months to cover debt amortizations due in 2026 and 2027.

“The ratings under review for upgrade reflect a stronger commitment from the current administration of the Government of Mexico to support PEMEX than previously anticipated,” said Roxana Muñoz, Vice President and Senior Credit Officer, Moody’s. “The government committed future equity-like contributions through a risk transfer structure for PEMEX, resulting in an improvement of the company’s debt amortization schedule and liquidity profile. It also proposed an Investment Fund, which is expected to help finance part of PEMEX’s investment needs with the aim of reversing the decline in production within the next two to three years.”

If completed, the measures could lead to an upgrade of up to two notches, Moody’s said.

Lingering Risks Remain

Despite the possible ratings uplift, Moody’s highlighted ongoing operational and financial challenges. PEMEX still faces significant supplier payments and must cover at least US$7 billion in debt service in 2026 alone. Unless deeper structural reforms reduce cash needs, Moody's stated that the company’s ratings will remain constrained.

Moody’s also flagged governance risks due to the NOC’s tight linkage with the Mexican state. The company’s credit standing is heavily dependent on the sovereign’s ability and willingness to extend support. A deterioration in Mexico’s own Baa2 (negative outlook) sovereign rating could weigh directly on the company.

Recent Update From Fitch

Moody’s review follows a move by Fitch Ratings earlier this month to upgrade PEMEX two notches, to “BB” from “B+,” after the government executed the US$12 billion P-Cap transaction. Fitch removed the NOC from Rating Watch Positive and assigned a stable outlook.

The upgrade was anchored in Fitch’s Government-Related Entity criteria, which assess the depth of ties between PEMEX and the Mexican state. The oversight role of the Ministry of Finance in liability management, coupled with legislative changes enabling shared debt ceilings, boosted the NOC’s Overall Linkage Score to 30, enough to justify the two-notch move.

Fitch also raised PEMEX’s standalone credit profile to “ccc” from “ccc-,” pointing to temporary liquidity relief. However, the firm warned that fundamentals remain fragile: leverage exceeds 15 times, downstream losses are growing, and operational performance continues to erode due to years of underinvestment. Additionally, recent incidents at key assets have heightened environmental and safety concerns.

PEMEX’s ESG profile remains a challenge. Fitch flagged elevated risks from greenhouse gas emissions, hazardous material handling, and employee well-being. It cautioned that sustainability depends not only on federal support but also on reversing production declines.

The government’s backing through P-Cap and the new investment fund is aimed at halting PEMEX’s long-running production slide. Crude oil output has dropped steadily from its 2004 peak of more than 3.4MMb/d to roughly 1.6MMb/d in 2025. Officials have argued that new financing structures, coupled with private participation, could revive exploration and production in shallow waters and mature fields within two to three years.

Moody’s said its review will weigh how effectively the investment fund can attract outside investors and whether the initiatives meaningfully stabilize PEMEX’s cash flows.

Broader Implications

The ratings momentum comes at a critical juncture for Mexico’s energy policy. The Sheinbaum administration has stressed the need for PEMEX to remain central to national energy sovereignty while acknowledging that the company’s debt load, above US$100 billion, poses systemic risks. Beyond high leverage and cash demands, the NOC continues to grapple with refinery inefficiencies, high greenhouse gas emissions, and a declining crude oil production. 

For Moody’s, the decisive factor will be execution. The agency expects to conclude its review once the P-Cap transaction and investment fund details are finalized later this quarter. A successful outcome could give PEMEX one of its first meaningful ratings improvements in years.