FACTBOX-Mexico's debt downgrade could hit major companies

Nov 23 (Reuters) - Fitch Ratings cut Mexico's sovereign debt rating on Monday, a move that was widely expected but that could have important implications for major Mexican corporations.

The lower rating will make it more costly for Mexico to borrow abroad, and sovereign debt downgrades generally hurt companies based in emerging markets by increasing their cost of capital.

Investors tend to demand higher yields from emerging market companies when their home government's ratings are cut, which increases borrowing costs.

Sometimes emerging market companies can be better rated than their home governments, although this is generally limited to those that have exceptionally strong balance sheets or extensive operations outside the country where they are based.

Mexico's IPC stock index .MXX maintained earlier gains following Fitch's announcement.

The following highlights the potential impact of the sovereign downgrade on some Mexican companies:

* AMERICA MOVIL (AMXL.MX) (AMX.N)

One of Mexico's biggest companies, America Movil may be able to maintain a higher rating than its home country. The mobile phone giant, controlled by billionaire Carlos Slim, is well regarded by analysts and investors because of its conservative balance sheet and diversified operations.

Standard & Poor's affirmed its BBB+ rating on the company, Latin America's biggest wireless phone operator, in October.

America Movil had $7.8 billion in debt at the end of the third quarter, the majority of which was issued in foreign currencies, according to filings with securities regulators.

* PEMEX [PEMX.UL]

State oil monopoly Pemex is the biggest loser. The company had consolidated debts of $50.6 billion as of the end of September and faced nearly $7.7 billion in foreign currency debt maturities through September 2010, according to filings with securities regulators.

Pemex's debt rating is closely linked to that of the government. Many investors view its securities as equivalent to government paper, despite the company's warning that they are not the same.

The company will have little choice but to absorb the higher borrowing costs that will come with the downgrade as its crushing tax burden forces it to fund virtually all of its capital expenditures with debt.

*TELMEX (TELMEXL.MX) (TMX.N)

Mexico's incumbent fixed-line operator could take a hit despite its conservative balance sheet, according to Mexican analysts. Also controlled by Slim, but lacking the diversified revenue base of sister company America Movil, Telmex is struggling with declining revenue as Mexicans disconnect fixed-line telephones and regulators turn up the heat to make the sector more competitive.

Telmex has been reducing its debt load, which was just above $7 billion at the end of September.

* CEMEX (CMXCPO.MX) (CX.N)

Cemex, the world's No. 3 cement maker, is unlikely to be greatly affected as its own debt troubles have already brought its ratings under heavy pressure. The company is rated well below Mexico's sovereign debt and is therefore unlikely to be downgraded. In fact, following its successful restructuring of $15 billion in bank and bond debt earlier this year, rating agencies have said they could upgrade Cemex by the end of 2010.

* WALMEX (WALMEXV.MX)

Walmex carries virtually no debt and has the support of majority shareholder Wal-Mart Stores Inc (WMT.N), the world's largest retailer. The company, Mexico's biggest retailer, is unlikely to see any impact from the downgrade unless it has a strong negative impact on Mexico's economy. And even that may not be enough to slow down the fast-growing chain, which added market share this year despite Mexico's deepest economic downturn since the 1930s. (Reporting by Robert Campbell; Editing by Lisa Von Ahn) ((R.Campbell@thomsonreuters.com; +52 55 5282 7142; Reuters Messaging: robert.campbell.reuters.com@reuters.net))