The credit rating agency S&P reported Tuesday that it ratified Mexico’s credit ratings of “BBB” in foreign currency and “BBB +” in local currency, both with a “negative” outlook.
The “negative” outlook indicates the possibility of a rating downgrade over the next year due to a potentially weaker fiscal profile, given risks stemming mainly from state oil company Pemex, according to the agency.
The rating agency highlighted the June electoral process that showed solid support for President Andrés Manuel López Obrador who, he said, should maintain a cautious macroeconomic management, with a net government debt of around 48% of GDP, in the last three years of its management.
Following the report, Mexico’s Undersecretary of Finance Gabriel Yorio said the agency’s decision to reiterate the sovereign notes was good news for the country. “It benefits the Mexican economy as a whole by allowing access to financing,” he wrote on his Twitter account.
On Monday, the rating agency Moody’s considered it unlikely that the course of Mexico’s macroeconomic and fiscal policy will change after the result of the recent midterm elections, in which the Morena party and its allies lost ground in the Chamber of Deputies.
Moody’s maintains Mexico’s sovereign rating at a “Baa1” level with a negative outlook.
For this year, the Bank of Mexico estimates that the national economy will have a rebound of up to 7%, after a historical drop of 8.5% was recorded in 2020.
“The forecast for 2021 reflects both a better performance of the economy in the first quarter of the year compared to what was previously anticipated, as well as the expectation that from the second quarter the gradual recovery will present itself at a higher rate. This is due to the effect of the strength of external demand, particularly in view of the large fiscal stimulus granted in the United States, “Banxico highlighted at the beginning of June.
With information from Reuters
