The international rating agency Moody's decided to change the outlook of the Mexican government debt from stable to negative, while maintaining its rating at Baa2, two notches above the investment grade necessary. Moody's considers that Mexico's credit profile benefits from its solid economic condition and the potential benefits of nearshoring. However, the future outlook was affected by the deterioration of debt affordability and increased rigidity in public spending, which complicates fiscal consolidation.
In its statement, Moody's pointed out that the low quality of institutions in Mexico compared to other rated countries, especially in terms of the rule of law and corruption control, along with possible weaknesses in the public policy framework and judicial independence, could limit the government's ability to address the growing credit challenges.
Moody's decision surprised several stakeholders, including the Ministry of Finance, as it came just before the presentation of the Economic Package for 2025. Although the impact on the exchange market was less than expected, investors are attentive to the information that the Ministry of Finance will disclose during the day.
S&P and Fitch rating agencies are expected to adjust or affirm their ratings based on the document that will be presented. It is crucial to maintain consistency in the projected figures and show a clear trend towards correcting imbalances in the coming years. The constitutional reforms implemented and the policies of the new U.S. government will also be key factors to consider in future evaluations.
In summary, Moody's decided to change the outlook of the Mexican government debt to negative, while its current rating remained at Baa2. The government must address credit challenges and demonstrate a clear trend towards correcting imbalances to maintain investor and rating agency confidence in the future.
