MEXICO CITY, Aug 1 (Reuters) - Fitch Ratings upgraded

Mexican state energy producer Petroleos Mexicanos' (Pemex)

credit rating to 'BB' from 'B+' on Tuesday, removing its

positive watch status and citing strengthened government

support, the agency said in a statement.

WHY IT'S IMPORTANT

The upgrade to BB, while still below investment grade,

reflects the government's efforts to try to stabilize Pemex, the

world's most indebted energy company, beset for years by

financial and operational challenges.

CONTEXT

This week, Mexico placed $12 billion in a debt offering

in an effort to ease Pemex's short-term financial pressures and

support debt refinancing.

President Claudia Sheinbaum's administration has pledged

to boost oil production while maintaining government backing for

the state oil firm.

Despite the financial infusion, Pemex still faces

operational risks due to declining oil production,

underinvestment, and environmental concerns.

BY THE NUMBERS

Pemex reported this week that its financial debt was

$98.8 billion as of June 2025. The recent $12 billion debt

offering covered $9.5 billion in debt obligations due in 2025

and 2026.

KEY QUOTE

Mexico's actions "signal stronger government oversight

and improved decision-making," Fitch Ratings said, referencing

this week's debt offering as well as debt ceiling adjustments

that strengthened Pemex's linkage to the sovereign.

WHAT'S NEXT

Fitch said future upgrades for Pemex could be a result

of additional government support, a sovereign rating increase

for Mexico, or an "irrevocable guarantee from Mexico's

government to sustainably cover more than 75% of Pemex's debt."