How Mexico’s Peña Nieto Spent a Fortune to keep Rating Agencies on His Side
Mexico- Former Mexican President Enrique Peña Nieto, along with the Secretaries of Finance, Luis Videgaray, Jose Antonio Meade and José Antonio González Anaya, as well as the Secretary of Energy, Pedro Joaquín Coldwell and the directors of Pemex granted a fortune to the credit rating agencies:
Standard & Poor’s received 500 thousand dollars.
Moody’s 450 thousand dollars.
Fitch Rating 350 thousand dollars
In total, $1,300,000 dollars were allocated, that is, 25 million 650 thousand pesos, according to information obtained in the transparency department portal.
In this way, the agencies corresponded, in a quid pro quo matter, to the generosity of the administration, granting favorable opinions on the energy reform.
An example of this is the opinion issued on December 20, 2013 by Standard & Poor’s Rating Services, where the ratings on a global scale of credit risk and long-term debt in foreign currency rose from BBB to BBB+, and in local currency of A- to A, from Petróleos Mexicanos (Pemex).
Also the ratings of Pemex's subsidiaries, PMI Trading, PMI North America and MGI Supply Ltd. also rose (global scale, foreign currency, BBB + / stable and local currency, A / stable).
However, despite these qualifications, the truth is that both the Mexican government and the oil company did nothing more than borrow. At the end of the Peña Nieto administraro, the Government had a debt of 10 billion pesos, while that of Pemex exceeded $100 billion dollars.
And, although the contracts with the three rating agencies are not considered illegal, since they were carried out with the formalities of any company that charges for their services to their clients, their ethics are questioned.
Recently, having stopped receiving the imposing sums that the previous administration granted them, they have modified their outlook to be negative in terms of our country's capacity to pay its debt.
On Thursday, Fitch Rating released a statement in which it downgraded Pemex's rating, claiming that there is "weakness in the company's credit profile" and "slow government action to strengthen Pemex's capital structure."
In this regard, President Andrés Manuel López Obrador responded that the rating agencies have done a bad job because they have not taken into account various favors in their analysis and that, previously, when there was no investment in exploration or drilling of wells, they qualified Pemex very well.
