The Ministry of Finance reported that the two rating agencies Kroll Bond Rating Agency (KBRA) and DBRS Morningstar (DBRS) ratified Mexico’s sovereign note at “BBB”.
This nomenclature corresponds to the second step above the investment grade, the perspective is Stable.
In a statement, the Ministry of Finance stressed that the marked perspective indicates that they do not expect changes in the rating for a period of 12 to 18 months.
With the pronouncement of the aforementioned agencies, there are three that have ratified Mexico’s sovereign note above investment grade: HR Ratings, KBRA and DBRS.
Both agencies coincide in highlighting the strength of the country’s external position, derived from the diversification of its debt portfolio.
They also pointed out as a positive factor, for this decision, the high level of international reserves of the Bank of Mexico for 203,000 million dollars, plus the Flexible Credit Line that is open at the International Monetary Fund (IMF) for 48,000 million dollars.
Nearshoring, positive expectation
As described by the Treasury, the two rating agencies highlighted that Mexico is well positioned to take advantage of the relocation of global value chains, the so-called nearshoring.
They recommended continuing with policies that promote private investment and an environment of greater competition.
And they emphasized that the geographical location of Mexico and its commercial and institutional proximity to the United States within the framework of the Trade Agreement with the United States and Canada reinforce the perspective of greater production and investment in the country.
What would lead to a change
In the DBRS statement, they specify that they are concerned about the quality of public spending.
“Low and misdirected public investment, in the opinion of DBRS Morningstar, raises concerns about future economic growth.”
The KBRA rating agency highlighted as negative sensitivities the pressures that may arise if economic growth weakens below expectations or if the government’s structural finances deteriorate.
