United Mexican States (Mexico) Surveillance Report
Executive Summary
KBRA affirms the long-term and short-term issuer ratings of Mexico.
Ratings Outlook
Mexico’s long-term ratings carry a Stable Outlook, reflecting expectations of a continued, albeit more gradual fiscal consolidation, resilience to external shocks, and improved near-term liquidity visibility at Petróleos Mexicanos (Pemex), even as the company’s solvency and liquidity challenges persist.
Key Credit Considerations
The ratings were affirmed because of the following key credit considerations:
Strong macroeconomic and fiscal management
Mexico’s macroeconomic management is underpinned by a flexible exchange rate, an independent central bank, and a track record of responsible fiscal policy. Strong debt management is reflected in contained spending and a strong debt profile. Oil price and FX hedging contain related risks despite high costs. These strengths are mitigated by a low albeit improving tax revenue yield, high interest costs, and Pemex’s financial challenges.
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