México Under López Obrador: A Credit Rating Slipping Story
During Andrés Manuel López Obrador’s administration, México’s credit status with Moody’s deteriorated, shifting from an “A3” rating to “Baa2” with a stable outlook. This downgrade has led to increased borrowing costs for the government and state-owned enterprises, impacting the country’s economic outlook.
Market unease following the June elections and concerns about radical reforms have further complicated México’s economic situation. The country’s Emerging Market Bond Index and Credit Default Swaps are trading as if rating agencies have already implemented an additional downgrade.
The Future Outlook
Moody’s analyst Renzo Merino highlighted that market perception plays a crucial role in determining government funding costs. While México’s credit rating has remained stable, a review is scheduled for the year-end. Institutional deterioration and governance factors could potentially lead to losing the investment grade status.
Despite challenges, México’s economic strength remains a key factor in supporting its sovereign rating, laying the foundation for future stability and growth.