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 CHICAGO, Sept. 21 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has issued initial ratings on the securities of Petroleos Mexicanos (PEMEX), the Mexican national oil company, denominated in currencies other than Mexican pesos. The ratings apply to general unsecured obligations of PEMEX of varying maturities including those in its $500 million medium-term note program under Rule 144A. For debt maturing by 1996, Duff & Phelps has assigned a rating of 'BBB' (Triple-B), for debt maturing 1997-1999, it has assigned a 'BBB-' (Triple-B Minus), and for debt maturing after 1999, it has assigned a `BB+' (Double-B- Plus). The ratings are the same as the ratings previously assigned to the debt of the Mexican government.
 The rating reflects PEMEX's importance to the Mexican economy and its monopoly status in the oil and gas industry in Mexico. PEMEX is the largest company in Mexico and one of the largest international oil companies. PEMEX is the top oil and condensates producer in the Western Hemisphere. During 1992, PEMEX provided slightly under 14 percent of Mexico's foreign exchange and its export sales accounted for about 30 percent of Mexico's total merchandise export earnings. Including indirect taxes collected by PEMEX, which account for 6 percent of the Mexican government's revenues, PEMEX provided about 24 percent of the government's 1992 revenues.
 Viewed independently from the Mexican government, PEMEX has strong fundamentals. We are encouraged by PEMEX's efforts to lower costs and to operate more efficiently. A mid-1992 restructuring created four new decentralized public agencies to be operated as subsidiaries of PEMEX: PEMEX Exploracion y Produccion, PEMEX-Refinacion, PEMEX-Gas y Petroquimica Basica and PEMEX-Petroquimica. Transactions between the affiliates are at arms-length and maintain internationally competitive pricing. Its workforce has been pared significantly over the past four years and the company is spinning-off or exiting non-strategic businesses. PEMEX is also making greater use of third parties to provide services that were previously done internally.
 Additionally, starting in 1993 PEMEX will be subject to a new fiscal regime. Through 1992 PEMEX was subject to a special duty on hydrocarbon extraction imposed by the government. The rate at which PEMEX's special duty was determined varied from year to year. The duty estimate was arrived at after taking into consideration an operating program, an investment program, and the financing program of the company. Hydrocarbon extraction duties in 1992 represented about 90 percent of PEMEX's pre-duty earnings. The new fiscal regime essentially makes transparent the concepts that were previously lumped together implicitly under the old regime: the payment of royalties for the extraction of oil and gas, an income tax, and the payment of dividends to its sole shareholder, the Mexican government.
 PEMEX is financially strong with debt comprising only 20 percent of total capitalization in 1992. PEMEX's investment program calls for capital expenditures of approximately $23 billion in the next five years, about 60 percent of which is expected to be funded internally. However, future financing requirements will depend on the government's new taxation framework and dividend policy.
 -0- 9/21/93
 /CONTACT: David W. Eisinger, CFA of Duff & Phelps Credit Rating Co. 312-368-3145/

CO: Petroleos Mexicanos ST: Illinois IN: OIL SU: RTG

LD -- NY092 -- 4377 09/21/93 17:11 EDT
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Publication:PR Newswire
Date:Sep 21, 1993

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