Mexico credit rating at risk if Pemex, CFE debt keeps rising-S&P

Ratings agency S&P on Thursday said it would be difficult for Mexico to maintain its credit rating if debts keep rising at state oil firm Petroleos Mexicanos and the state power company, the Comision Federal de Electricidad, or CFE. Analysts have long worried the financial woes of the money-losing company known as Pemex could drag down the sovereign rating of Latin America's second largest economy.

Ratings agency S&P on Thursday said it would be difficult for Mexico to maintain its credit rating if debts keep rising at state oil firm Petroleos Mexicanos and the state power company, the Comision Federal de Electricidad, or CFE.

Analysts have long worried the financial woes of the money-losing company known as Pemex could drag down the sovereign rating of Latin America's second largest economy. Pemex had financial debts of $105 billion as of March. S&P lowered Mexico's long-term foreign currency credit rating on Mexico to BBB from BBB+ in March.

Sebastian Briozzo, S&P Global's head of the sovereign and international public finance ratings team in Latin America, said Mexico's debt stood at 47% of gross domestic product (GDP) but with debts of Pemex and CFE it was close to 60%. "If this (debt) increases in a very significant way, it will be very difficult for Mexico to maintain not only its current rating, but also BBB- ratings," said Briozzo.