By Sebastian Boyd / Bloomberg
Mexican President Enrique Pena Nieto’s track record of winning ratings upgrades is in serious jeopardy.
On Tuesday, S&P Global Ratings revised the country’s outlook to negative and said there’s at least a one-in-three chance of a downgrade in the next two years if Mexico’s debt increases more than forecast.
It marked the second time in the past five months that a major ratings company lowered the nation’s outlook. The trend has been mirrored in the swaps market, where Mexico is seen as less creditworthy than peer Peru, as well as lower-rated Panama.
The negative outlooks represent a reversal for Mexico, which won upgrades from all three large rating companies as Pena Nieto pushed through historic overhauls of the nation’s energy, telecommunications and banking industries between 2012 and 2014.
But the changes have failed to spark the economic boom that Pena Nieto promised. Instead, his government has repeatedly slashed its growth forecasts amid low oil prices and a sluggish expansion in the U.S., Mexico’s biggest trading partner.
“The economy’s tanking,” said Luis Maizel, co-founder of LM Capital Group. “How many times have they reduced growth expectations? How many times can you use the same excuse: that the U.S. economy is slowing so the Mexican economy is slowing down?”