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S&P downgrades Mexican debt

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Ratings agency Standard & Poor's downgraded Mexico's sovereign debt to BBB status Monday on concerns about the country's fiscal outlook, sparked by the global economic crisis.

Tuesday, December 15, 2009
By: AFP writers

MEXICO CITY, December 15, 2009 (AFP) - Ratings agency Standard & Poor's downgraded Mexico's sovereign debt to BBB status Monday on concerns about the country's fiscal outlook, sparked by the global economic crisis.

The downgrade for the Latin America and emerging-market powerhouse, from BBB+, comes as the country continues to wrestle with the fall-out from the international credit crisis.

The downgrade spells more expensive borrowing for the country as it tries to kick-start the economy.

Although still investment grade, S&P said the downgrade reflected concerns that Mexico's tax base will be slashed, and on slumping petrol revenues, which make up around 35 percent of the national budget.

Mexico's economy was particularly badly hit by the global crisis thanks to its dependence on trade with the United States.

As reforms of state-owned oil giant Pemex have stuttered the firm has seen it output slump, with a direct affect on government coffers and investor confidence.

Mexico was downgraded in November by S&P's rival ratings agency Fitch.

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