Mexico - June 2026

International credit rating agencies downgraded Mexico in May over a broad range of concerns, including a deteriorating fiscal position, rising debt levels, sluggish economic growth, and the punitive burden of ongoing financial support for the state-owned oil company, Petróleos Mexicanos (Pemex). Investor uncertainty over the current review of the US-Mexico-Canada (USMCA) trade pact and the budgetary impact of the Middle East conflict have further fuelled worries.

First, S&P Global Ratings revised Mexico’s outlook to ‘negative’ from ‘stable’ on 12 May, signalling potential future downgrades – even though the agency maintained Mexico’s long-term foreign currency credit rating at BBB and its local currency credit rating at BBB+. Then, on 20 May, Moody’s Ratings downgraded Mexico’s local and foreign currency ratings from Baa2 to Baa3 – the agency’s lowest investment grade rating, just one notch above junk status. However, in contrast with the S&P move, Moody’s also revised Mexico’s outlook from ‘negative’ to ‘stable’.

“The negative outlook reflects the risk of very slow fiscal consolidation largely due to low economic growth resulting in a faster-than-expected buildup in government debt levels and higher interest burden,” S&P said in its report. “The expected continued substantial fiscal support for Petróleos Mexicanos and [state-run electricity company] Comisión Federal de Electricidad (CFE) would continue to aggravate Mexico’s fiscal rigidities,” it added, while “an unexpected worsening of Mexico’s close trade and other economic links with the US could also weaken the country’s solid external position”.

Meanwhile, Moody’s said that its downgrade “reflects a sustained weakening in fiscal strength”. The agency added: “Despite efforts to reduce the fiscal deficit, other policy priorities, including energy sovereignty and a redistributive spending model, have weakened fiscal policy anchors and policy effectiveness, and contributed to wider deficits and faster deterioration in debt metrics than previously expected.”

While noting that the government’s investment-related initiatives could support a gradual economic improvement in the medium-term, Moody’s warned that “economic growth is constrained by structural weaknesses, including high informality, insecurity and infrastructure bottlenecks related to energy and water availability”. However, Moody’s also said that the revision to a ‘stable’ outlook “reflects our expectation that further weakening in fiscal strength will be gradual and partly offset by Mexico’s macroeconomic stability, policy responsiveness, and underlying economic strength”.

In response to the downgrades, Mexico’s Finance Minister Edgar Amador Zamora insisted that the country is in a solid economic and financial position. He said that the government is “convinced” that it will recover its stable S&P outlook with the current measures being implemented, including incentives for public and private investment, while also highlighting a reduction in the fiscal deficit from 5.8% to around 4.3% of GDP last year.

“Mexico maintains its investment-grade rating from all eight agencies that assess its sovereign debt, reflecting its commitment to responsible economic policy and the sustainability of public finances”, the finance ministry said in a statement on 12 May.

• Fitch

The other of the big three rating agencies, Fitch Ratings, has Mexico at BBB-, one level above junk, with a stable outlook. That is in line with the Moody’s score and one notch below S&P’s rating. For now, analysts at Barclays see no “acute risk” of Mexico losing its investment-grade status.