Research Update: Mexico 'BBB' Foreign Currency And 'BBB+' Local Currency Long-Term Ratings Affirmed; Outlook Remains Negative

Mexico's nationwide midterm elections on June 6 showed solid support for President Lopez Obrador and his allies, who, with a simple majority in Congress, remain well-placed to drive the policy agenda in the second half of the president's six-year term. We assume ongoing cautious macroeconomic management, with net general government debt holding steady at about 48% of GDP over the next three years, while growth decelerates after a 5.8% rebound in 2021 as pressures on the business climate--some long-standing and some associated with recent policy steps--weigh on investment. We affirmed our 'BBB' long-term foreign currency and 'BBB+' long-term local currency sovereign credit ratings on Mexico. The outlook remains negative, indicating the risk of a downgrade over the coming 12 months

...- Mexico's nationwide midterm elections on June 6 showed solid support for President Lopez Obrador and his allies, who, with a simple majority in Congress, remain well-placed to drive the policy agenda in the second half of the president's six-year term. - We assume ongoing cautious macroeconomic management, with net general government debt holding steady at about 48% of GDP over the next three years, while growth decelerates after a 5.8% rebound in 2021 as pressures on the business climate--some long-standing and some associated with recent policy steps--weigh on investment. - We affirmed our '###' long-term foreign currency and '###+' long-term local currency sovereign credit ratings on Mexico. - The outlook remains negative, indicating the risk of a downgrade over the coming 12 months due to either weakening public finances, likely arising from managing complex fiscal challenges related to PEMEX, or the possibility that some government initiatives could further weigh on the business...

Research Update