The measure is adopted as a result of an increase in risk derived from external factors such as Covid-19.
Mexico City (Sergio Ángeles) – HR Ratings downgraded Mexico’s sovereign debt rating from HR A – to HR BBB + for the long term and from HR2 to HR3 for the short term, keeping the outlook negative.
The downgrade in the rating of Mexico’s sovereign debt is the result of an increase in the risk derived from exogenous shocks, including the immediate impact of the Covid-19 on global value chains and consequences on the world economy, the drop in the price of oil and the deterioration in the prospect of world growth.
In addition, HR Ratings predicts a strong recession in the local economy in 2020. “We estimate a 2.3 percent contraction in GDP and a consequent deterioration in our medium-term economic prospects,” he said in an analysis report.
S&P Downgrades Mexico
The rating agency Standard and Poor’s (S&P) yesterday lowered Mexico’s credit rating. For long-term debt in foreign currency, the credit note went from BBB + to BBB, while that of national currency fell from A- to BBB +, due to the effects of the coronavirus (Covid-19) and the international fall in prices. of crude oil.
The outlook remains negative for the Country, which implies the possibility of a further note reduction in the next 12 or 24 months. Mexico maintains the investment grade, but with a greater susceptibility to adverse effects.
Read: Gasoline and diesel prices in Mexico today Wednesday April 1, 2020
“We foresee a pronounced impact on the Mexican economy derived from the combination of ‘shocks’ of Covid-19 in Mexico and in the United States, its main trading partner, and the fall in international oil prices,” the rating agency said.
These shocks, although temporary, will worsen the weak growth trend expected for 2020-2023. However, the rating agency warned that fiscal weakness and an increase in debt would be factors that could lead to lowering Mexico’s credit rating again.
In foreign currency debt rating, Mexico is in the same evaluation that Bulgaria, Indonesia, Italy and Portugal have, although it is above Brazil.
Source: Central Valley Business Journal
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