Moody’s downgrades debt-laden oil company Pemex’s credit rating by two notches to B3 By Reuters

© Reuters. FILE PHOTO: A sign for Petroleos Mexicanos (Pemex) is photographed July 26, 2023, at the company’s headquarters in Mexico City, Mexico. REUTERS/Raquel Cunha

MEXICO CITY (Reuters) – Credit rating agency Moody’s (NYSE:) on Friday downgraded Mexico’s state-owned oil company Pemex by two notches to B3 from B1.

Moody’s, which has a negative outlook on the company, assumes the company enjoys high government support and said this support could be jeopardized by a worsening financial situation in Mexico in 2024.

Pemex is one of the most indebted oil companies in the world, with financial liabilities exceeding $100 billion.

The agency said it expected Mexico’s fiscal deficit to rise significantly due to high borrowing costs, social spending and symbolic government projects.

Moody’s said it expects costs to increase for additional support for Pemex until Mexico’s next administration takes office in October.

The downgrade comes on the same day that the Mexican government ordered the acceptance of a hydrogen plant at the Pemex refinery, which was sold to France’s Air Liquide (OTC:) under the previous administration.