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Subject
Mexico credit outlook downgrades.
Significance
On August 23, ratings agency Standard & Poor's (S&P) lowered the sovereign credit outlook of the Mexican government to negative from stable. The same day, the credit outlooks of state-owned enterprises Pemex (oil) and CFE (electricity) were also moved to negative. Moody's modified its outlook on Mexico's debt to negative in March.
Impacts
A rating downgrade would represent both a financial and a political blow for the government.
The 'normalisation' of US monetary policy should moderately increase borrowing costs for emerging sovereigns, including Mexico.
In the unlikely case of a global liquidity crunch, Mexico may activate its IMF credit line, borrowing up to 88 billion dollars immediately.
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2016
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