Mexico & Nafta - July 2019

Ratings downgrade: On 6 June, credit ratings agency Fitch downgraded Mexico’s Long-Term Foreign Currency and Local Currency Issuer Default Ratings (IDRs) to ‘BBB’ from ‘BBB+’ while another credit ratings agency, Moody’s Investors Service, lowered its outlook on Mexico’s rating from ‘stable’ to ‘negative’. Fitch said the downgrade reflects a “combination of the increased risk to the sovereign’s public finances from [Mexico’s state-run oil company] Pemex’s deteriorating credit profile together with ongoing weakness in the macroeconomic outlook, which is exacerbated by external threats from trade tensions, some domestic policy uncertainty and ongoing fiscal constraints”. Moody’s echoed these concerns, stating that Mexico’s “policy framework is weakening in two key respects, with potential negative implications for growth and debt. First, unpredictable policymaking is undermining investor confidence and medium-term economic prospects. Second, lower growth, together with changes to energy policy and the role of Pemex, introduce risks to Mexico’s medium-term fiscal outlook, notwithstanding the government’s near-term commitment to prudent fiscal policy.”

End of preview - This article contains approximately 311 words.

Subscribers: Log in now to read the full article

Not a Subscriber?

Choose from one of the following options

• Subscribe
• Sign up for a one-time, 14-day trial