(Adds detail from S&P statement, peso reaction)
NEW YORK, Dec 14 (Reuters) - Standard & Poor's on Monday cut Mexico's credit ratings by one notch, saying fiscal challenges will persist "over the coming years" despite recent tax increases.
Prospects for substantial fiscal reform or growth-enhancing measures in the second half of President Felipe Calderon's term are also decreasing, S&P said in a statement.
"Mexico's recent steps to raise non-oil revenues and improve efficiencies in the economy will likely be insufficient to compensate for the weakening of its fiscal profile," the ratings agency said.
S&P became the second agency to cut Mexico's ratings in the past 30 days, after a similar move by Fitch Ratings last month. The S&P move was expected by many analysts, and the impact on the peso was limited.
The peso
S&P downgraded the country's foreign-currency sovereign ratings by one notch to BBB from BBB-plus. The outlook on the new rating is stable. (Reporting by Walter Brandimarte and Daniel Bases in New York and Michael O'Boyle in Mexico City; Editing by Dan Grebler)