By Patricia Rey Mallén - It looks like Mexico has a good 2014 coming up. Financial analysis firm Moody’s elevated the country’s rating from Baa1 to A3, making Mexico the second country in Latin America to attain A status, after Chile.
The ratings agency based its decision mostly in the structural reforms approved last year by President Enrique Peña Nieto’s administration.
“The decision to upgrade Mexico's sovereign ratings was driven by the structural reforms approved last year, which Moody's expects will strengthen the country's potential growth prospects and fiscal fundamentals. As the full impact of the reforms becomes more evident over time, Moody's expects that Mexico's credit metrics will report firm -- but gradual -- improvements, thereby further reinforcing the country's already robust sovereign credit profile,” read the report.
Moody’s pointed out that the rating could improve more if the country attained a GDP growth of 4 percent this year and a significant reduction in debt, and, on the other hand, if there is a prolonged period of disappointing performance and sluggishness of the fiscal development.
Moody’s said that it could take between two and three years to reevaluate Mexico’s ratings. However, the agency noted that the stable outlook on Mexico reflects the expectations that, as the reforms are implemented, they will result only in more favorable economic, fiscal and financial indicators. “Mexico´s credit standing within the A-peer group is not expected to change significantly,” read the report.
With the new rating, Mexico is faring similarly to Poland and Malaysia, according to Mauro Leos-López, a Moody’s analyst and one of the authors of the report.
“And even if it fares slightly below those two countries, Mexico is doing better in terms of fiscal performance and managing of the debt,” Leos-López pointed out to CNN Expansión.
This is the second analysis firm to elevate the country’s rating, after Standard & Poor’s upgraded Mexico to a BBB+ in December 2013.