Despite the bullish outlook for oil and natural gas prices, Moody’s Investors Service has downgraded the corporate family rating (CFR) of Mexican state oil company Petróleos Mexicanos (Pemex) to B1 from Ba3.

The action “was prompted by the downgrade of Mexico’s rating, given the critical importance of the government’s financial strength and support in the assessment of Pemex’s credit profile due to its high liquidity risk,” said Moody’s analysts led by Nymia Almeida, senior vice president for corporate finance.

“The action also considered Pemex’s high debt maturities in 2022-24 and Moody’s expectations for continued negative free cash flow and the need for large amounts of external funding given persistent losses at the company’s refining business,”...