S&P Global Ratings international agency upped Mexico’s long-term outlook from negative to stable

1225

A major ratings agency lifted Mexico’s credit outlook on Wednesday, citing fiscal and monetary policy improvements, in a rare dose of optimism for the government’s efforts to revive an economy that was ailing even before the pandemic stuck.

S&P Global Ratings upped Mexico’s long-term outlook to stable from negative, according to a statement issued on Wednesday, while affirming the country’s BBB long-term foreign currency rating and BBB-plus long-term local currency rating.

The rating agency’s decision was applauded by President Andres Manuel Lopez Obrador, who in the past has blasted credit agencies when they have criticized his state-centric energy policies, including in 2020 when state oil company Pemex lost its investment grade rating.

In a post on Twitter, the leftist president shared a message from his finance minister that touted the revised outlook as bringing more certainty to investors.

“This improved outlook… will allow continued favorable access for international and national markets,” the finance ministry said in a statement.

S&P stressed that it expected the government to pursue economic policies that will result in stable debt and fiscal policy.

Mexico’s new outlook “incorporates the complex fiscal challenges” at Pemex, one of the world’s most indebted oil companies, and state-run power company CFE.

S&P cited “less uncertainty about energy policy” as part of its reasoning for the improved outlook, following Lopez Obrador’s failure earlier this year to push through a constitutional electricity overhaul that would have enlarged CFE’s power over the sector.

Even so, S&P noted that additional “extraordinary support” that Pemex or CFE might need, or trade disputes with the United States or Canada, could lead to a ratings downgrade for Mexican government debt over the next couple years.

The agency added that per capita growth of Mexican gross domestic product will likely hover below other emerging markets through 2025.

Source: El Economista

Mexico Daily Post