Fitch Rates Pemex's 2018 US$1B & 2038 US$500MM Bond Issuance 'BBB'

Business Wire, June 6, 2008

CHICAGO -- Fitch Ratings has assigned a 'BBB' rating to new notes issued by the PEMEX Project Funding Master Trust, and unconditionally guaranteed by Mexico's state-owned Petroleos Mexicanos (PEMEX). The ratings apply to the re-opening of the 5.75% 2018 Notes for US$1 billion and US$500 million of 6.625% bonds due 2038. The 2018 Notes will be consolidated to form a single series with the outstanding 2018 Notes originally issued on Oct. 22, 2007 and will now total US$2.5 billion. Proceeds will be used for infrastructure projects. The ratings are placed on Positive Rating Watch.

As a state-owned oil company, PEMEX's foreign currency rating remains highly linked with the sovereign. Since 2005, Fitch has rated PEMEX one notch lower than the United Mexican States (UMS). The notching between the rating of PEMEX and the UMS was incorporated due to the government's fiscal regime which virtually stripped away all of the PEMEX's free cash flow and resulted in the steady erosion of PEMEX's equity capital and required PEMEX to fund its large and growing capital investment program with debt. The company's debt increased to MXP537 billion at the end of 2005 from MXP219 billion at the end of 2001 and net worth declined to MXP27 billion from MXP123 billion. PEMEX's debt is not guaranteed by the government.

The Positive Rating Watch reflects the possibility that the most recent fiscal regime that was passed in 2007, along with prior tax reform passed in 2006, could slow the growth in PEMEX's debt level as it copes with challenges related to production declines. The Rating Watch is likely to be resolved after a full review of the results of these financial consequences on PEMEX. Continued rapid growth of the debt levels at PEMEX, and absent further expected fiscal reforms at UMS would likely lead to the maintenance of the existing ratings.

For more information on Fitch's upgrade of PEMEX and PEMEX Project Funding Master Trust, please see the Sept. 21, 2007 press release titled 'Fitch Ratings Upgrades PEMEX and Related Entities; Rating Watch Positive', available on the Fitch Ratings web site www.fitchratings.com. For more information on Fitch's upgrade of UMS, please see the Sept. 19, 2007 press release titled 'Fitch Ratings Upgrades Mexico to 'BBB ',' available also available at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.