S&P: Petroleos Mexicanos' Proposed Senior Unsecured Notes Rated 'BBB+'
We expect the company to use the proceeds from these issuances to finance its investment program. The notes benefit from the guarantees of Pemex Exploracion y Produccion, Pemex Cogeneracion y Servicios, Pemex Perforacion y Servicios, Pemex Logistica, and Pemex Transformacion Industrial, which also currently guarantee all of PEMEX's outstanding notes.
Our foreign currency ratings on the company are the same as the sovereign foreign currency rating on Mexico, based on our assessment of the government's almost certain likelihood of extraordinary support to the company. We also assess PEMEX's stand-alone credit profile as 'bb', reflecting the company's solid position in the global oil market, average crude production of 2,203 million barrels per day (bpd) as of June 30, 2016, as well as its proven reserves of 8.1 years. The ratings also reflect the company's weak after-tax financial performance, as seen in the expected debt to EBITDA of 4.5x-5.0x and funds from operations to debt of 3.5%-4.0% in the next two years.