Fitch Ratings has affirmed the ratings assigned to the outstanding series issued by PEMEX Finance Ltd. as follows:
-- Series 1998 9.15% Notes due 2018 at 'A+';
-- Series 1999 10.61% Notes due 2017 at 'A+'.
The Rating Outlook is Stable.
PEMEX Finance Ltd. is a Cayman Islands special purpose company wholly owned by Petroleos Mexicanos S.A. de C.V. (Pemex). The future flow program is backed by the sale of receivables generated by the future sales of Maya crude to designated U.S., Canadian and Aruban customers.
KEY RATING DRIVERS
The rating affirmation reflects:
Credit Quality of Pemex: On May 9, 2014: Fitch affirmed Pemex's foreign and local currency Issuer Default Ratings (IDRs) at 'BBB+' and 'A-', respectively. The Rating Outlook is Stable.
Low Diversion Risk: The strong legal structure keeps oil export payments offshore, making it difficult for cash flows to be diverted away from investors. In Fitch's view, the likelihood of Mexico imposing material or permanent restrictions on crude oil exports is low.
High Debt Service Coverage: The transaction's high quarterly debt service coverage ratio (averaging 159.5x in 2014), which considers quarterly collections and the maximum quarterly debt service, protects investors from severe stresses related to sustained oil price declines and/or production decreases.
Small Size of Future Flow Program: The future flow program represents less than 1% of Pemex's total liabilities. The outstanding balance of the program is $387.5 million. Two series paid in full according to schedule in 2014.
RATING SENSITIVITIES
The ratings assigned to the notes are sensitive to changes in the credit quality of Pemex as well as to sustainable severe reductions in production and/or prices of Maya crude that negatively impact the performance of the program.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Future Flow Securitization Rating Criteria' (June 9, 2014);
--'Global Structured Finance Rating Criteria' (August 4, 2014);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 14, 2014);
--'Petroleos Mexicanos S.A. de C.V.' (July 31, 2014).
Applicable Criteria and Related Research:
Future Flow Securitization Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749768
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Counterparty Criteria for Structured Finance and Covered Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=966535
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
