Mexico: Moody’s changes outlook to negative, affirms rating

By FXStreet The rating agency Moody’s kept Mexico’s A3 rating unchanged but lowered the outlook from stable to negative, on fiscal and economic challenges to achieving consolidation objectives and stabilize debt ratios.

Key Quotes from Moodys:

“Moody’s Investors Service has today affirmed Mexico’s A3 issuer and government bond ratings and changed the outlook to negative from stable. The government’s senior secured and senior unsecured government bond ratings were affirmed at A3, as were the senior unsecured MTN and senior unsecured shelf program ratings at (P)A3.”

“The principal driver of Moody’s decision to change the outlook to negative from stable is the rising fiscal and economic challenges that the authorities face in achieving further fiscal consolidation. At the time that the structural reforms were adopted, Moody’s expected that fiscal consolidation, coupled with much stronger real GDP growth (above 3%), would lead to a stabilization in the debt burden.”

“However, a combination of the oil price shock and the slower than expected growth have undermined the economic outlook. Moody’s forecasts only moderate growth of around 2.5% for 2016 and 2017, which will challenge the government’s fiscal consolidation efforts.”

“Lower growth and a low oil price environment will reduce fiscal revenues. While fiscal reform has improved the structure of fiscal …read more

Source:: FX Street