Mexico became only the second country in Latin America which gained the coveted A credit rating on a scale of Moody’s. The international rating agency upgraded the credit rating of Mexico in A3 from Baa1, even with stable outlook, citing the important economic reforms has promoted in Congress president Enrique Pena Nieto. The upgrading of the Mexican economy in the highest category is highly significant as the emerging economies who have rated A are numbered on the fingers of one hand, such as Chile, Poland and Malaysia. The decision Investors Service of Moody’s comes after the Mexican president manages to overcome the impasse politically divided Congress and to get the most important economic reforms in Mexico from the 1990’s when he had concluded trade agreement NAFTA with the United States and Canada.
The trust of the people in Mexico is growing, said Nieto president after the upgrade. With the decision to improve the yield of 10 year government bonds of the country fell by 13 basis points to 6.52%, which is the biggest one day drop since late December. The deceleration of the Mexican debt and the confirmation of the national currency markets came after the upgrade will help reduce the country’s borrowing costs and could also support local assets in an emerging global market sell off. The agency Moody’s expects the reforms last year, including the opening of the state energy sector to private investment and tax reform, to enhance the development prospects of the country and the economic fundamentals which essentially means that the international firm hopes that sweeping changes in the energy and telecommunications will boost mainly to competition.
Mauro Leos, senior analyst at Moody’s, told Reuters that the rating agency sees no other significant changes in the credit ratings of Mexico for the next two to three years. I think that is good and worthwhile and largely reflects recognition of the major structural reforms undertaken since the beginning of last year, said Alberto Ramos, an economist at Goldman Sachs in New York. The example of Moody’s upgrading Mexico are expected to follow other international rating agencies, the Standard & Poors and Fitch Ratings.
By Nicole P.