Mexico's Bonds Trade Like Junk After Record Pemex Bailout

Mexico's sovereign debt is now trading like junk after the government poured $130 billion into Petroleos Mexicanos (Pemex), the state-owned oil company. The country raised over $41 billion in hard-currency bonds during 2025, with most of that capital going towards managing Pemex's debt load and keeping the company liquid.

The strategy produced a paradoxical short-term result: Pemex's dollar bonds delivered average returns of about 24% in 2025, the best performance of any issuer in Latin America. However, this success came at a cost to Mexico's credit rating, which now sits one notch above junk status.

Rating agencies are closely watching the situation, with Moody's downgrading Mexico one notch to Baa3, the lowest rung of investment-grade territory. Fitch maintains Mexico at BBB- with a one-notch penalty explicitly linked to Pemex's estimated $99 billion in financial obligations.