Mexican Finance Minister Carlos Urzua said on April 13 he does not expect rating agencies to further downgrade the credit rating of state-owned energy company Pemex.
With $106 billion in financial debt, Pemex is the world's most indebted oil company and is teetering on the brink of having its debt downgraded to below investment grade.
"We don't believe Pemex's credit rating will be downgraded," Urzua said in a press conference at the IMF and World Bank spring meetings in Washington.
Urzua said that if he was a foreign investor, "I'd be buying Pemex debt because Pemex likely won't have to go out (to the debt market) this year," which he said would make the existing bonds appreciate in value.
Earlier this year credit rating agency Fitch cut Pemex's rating by two notches to BBB-, the lowest investment grade rating, and assigned a negative outlook. A further downgrade to 'junk' territory would likely force some of the debt holders to sell.
The parties must now renegotiate a deal that would transfer Breitburn's Permian reserves to investors including Elliott and WL Ross through their participation in a $775 million rights offering.
In a double blow for Mexico, credit ratings agency Fitch downgraded the nation's sovereign debt rating on June 5, citing risks posed by heavily indebted oil company Pemex and trade tensions, while Moody's lowered its outlook to negative.
Oilfield services provider Weatherford International Plc, burdened by a heavy debt load and years of losses, said on May 10 it would file for Chapter 11 bankruptcy protection.