Pemex bonds sink as Fitch puts it near junk

Bloomberg

Petroleos Mexicanos bonds cratered after Fitch Ratings downgraded the state-owned company to just a notch above junk, spurring a slide in sovereign debt and the peso.
The yield on Pemex bonds due in 2027 rose 28 basis points to 7.251 percent at 1:02 pm in New York, after jumping as much as 40 basis points earlier in the day. Its five-year credit default swaps climbed 24 basis points to 319.
Fitch cut the embattled oil producer’s long-term issuer default rating two notches to BBB- from BBB+ and maintained its negative outlook. Pemex had $107 billion in debt as of September last year, the most among oil majors. While President Andres Manuel Lopez Obrador promised to support the company early in his campaign, investors have been disappointed by the failure of his administration to inject fresh funds.
“The ratings agencies are pretty clear on what they need,” said Edwin Gutierrez, a money manager at Aberdeen Asset Management in London. “The sovereign needs to get its act together and make it clear what kind of support they are prepared to give as what’s been given thus far is clearly insufficient.” The stress on Pemex is having a spillover effect.
Mexico’s peso lost 0.9 percent to 19.16 against the dollar— the worst performance among the world’s major currencies — while the country’s benchmark 10-year dollar bond yields increased 4 basis points to 4.56 percent.