International Credit Rating Agencies Downgrade Mexico's Credit Ratings Consecutively

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] International credit rating agencies have consecutively downgraded Mexico's credit rating, which is expected to face an economic recession due to the impact of the novel coronavirus disease (COVID-19).

On the 17th (local time), international credit rating agency Moody's downgraded Mexico's sovereign credit rating from 'A3' to 'Baa1' by one notch. The rating outlook was given as 'negative.'

In its report, Moody's stated, "Mexico's medium-term economic growth outlook has significantly weakened," and evaluated that "the ongoing deterioration of the financial and management status of the state-owned oil company Pemex is weakening the national finances."

Earlier, on the 15th, another credit rating agency Fitch also lowered Mexico's sovereign credit rating from 'BBB' to 'BBB-'. According to Fitch, 'BBB-' is just above the non-investment grade 'junk' rating. Last month, Standard & Poor's (S&P) had lowered it from 'BBB+' to 'BBB'. As a result, all three major international credit rating agencies have downgraded Mexico's credit rating.

Due to expanding policy uncertainty and other factors, Mexico already recorded a negative growth of 0.1% last year, and a deeper recession is expected this year amid the COVID-19 shock.

The International Monetary Fund (IMF) forecasted that Mexico's economy will contract by 6.6% this year, and global investment banks are predicting negative growth in the range of 7 to 8%.

The ongoing crisis at Pemex is also weighing heavily on Mexico's economy. On this day, Moody's downgraded Pemex's credit rating by two notches to Ba2, a junk (speculative grade) level. Fitch had already downgraded Pemex to junk status last year and has further lowered its rating twice this month alone.

Following Moody's announcement, Mexico's Ministry of Finance stated, "Mexico's sovereign credit rating is still investment grade," and asserted that the economic foundation remains solid.

This content was produced with the assistance of AI translation services.