Moody’s de México, the arm of Moody’s Investors Service for Mexico has changed its outlook for the Comision Federal de Electicidad‘s (CFE) to negative from stable.
Moody’s announced the change in an April 1 news release.
The rating action follows the Government of Mexico (A3 negative) rating outlook change to negative from stable, Moody’s said.
CFE, wholly-owned by the Mexican federal government, is Mexico’s dominant, vertically-integrated electric utility and one of the largest electric utility in Latin America, with installed generation capacity of 55.0 GW when including the generation fleet of the independent power producers (12.9 GW).
“The rating action reflects the negative outlook on the A3 rating of the Government of Mexico, the support provider, which contributes with a rating uplift under our analytical framework for Government Related Issuers,” Moody’s said.
“While Mexico´s government does not guarantee CFE’s debt obligations; Moody´s believes that there is significant likelihood of government support given the company´s status as a wholly government-owned entity, and its strategic importance to the country’s economy overall,” Moody’s said.
“Our estimate of very high default dependence reflects our view that CFE shares a number of common risk factors with the government,” Moody’s said.