Ratings agency Moody's Investors Service said on Tuesday that a credit upgrade of Mexican state oil company Petroleos Mexicanos is unlikely given its consistent negative free cash flow generation, despite a recovery in oil prices.
Moody's said that its Ba2 credit rating for Pemex, as the company is known, includes the assumption of "very high government support in case of need and very high default correlation between Pemex and the government of Mexico."
"An upgrade is unlikely given the negative outlook for Mexico's Baa1 rating and Moody's expectations for continued negative free cash flow for Pemex," Moody's said in a statement.
(Reporting by Anthony Esposito, Editing by Rosalba O'Brien)