CFE will place $1 billion in bonds to refinance debt

Moody’s Rating Agency It stated that it assigned a Baa1 rating on a global scale to Federal Electricity Authority (palm) and Suggestion for unsecured global notes for up to a billion dollars. The bonds will be issued in a single 12-year tranche and the funds will be used to refinance existing debt.

The agency noted that CFE’s Baa1 ratings mirror the Mexican government’s Baa1 rating. (Baa1 negative) as a CFE support provider. Moody’s noted that its assessment shows very strong tacit government support for the company in the event of financial difficulties.

“Although the Mexican government does not guarantee CFE debt obligations, Moody’s She believes there is a high potential for government support given the company’s position as a wholly owned entity of the government and its strategic importance to the country’s economy as a whole.”

He added that the assigned Baa1 rating considers the proposed observations to be direct commitments from the CFE. Although they will be jointly and severally secured by the CFE-producing subsidiaries, the bonds do not benefit from any additional credit enhancement.

Moody’s said that although a rating upgrade is unlikely in the near futureThe outlook can be changed to stable if the outlook for the Mexican government’s rating is changed to stable.

“The rating on global banknotes will come under pressure if the CFE rating is downgraded. The CFE rating will face downward pressure if the sovereign bond rating is downgraded or if our view of implicit government support is lowered. Ratings could also be downgraded if the CFE’s leverage increases or its ability to generate is affected. adequate cash flow, resulting in a steady deterioration in credit metrics.”

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