HR Ratings Improves Mexico's Perspective

HR Ratings confirms the long-term ranking of HR A-(G) and short-term of HR2 (G) for Mexico's sovereign debt
Photo: File Photo/EL UNIVERSAL
Antonio Hernández
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HR Ratings, along with Standard and Poor's and Fitch Ratings, improved Mexico's perspective from negative to stable.

The agency confirms the long-term ranking of HR A-(G) and short-term of HR2 (G) for the country's sovereign debt.

According to HR Ratings, these adjustments are based on the good performance of the public finances at the end of 2016 and during the first half of 2017, periods that have improved several measurements of the balance sheet.

“Additionally, the strong revaluation of the Mexican peso has helped to reduce the Gross Domestic Product (GDP) debt ratio significantly. Even though the financial surplus observed during the first semester was driven by the contribution of the operation remnants of the Bank of Mexico (Banxico), the reduction of the expenditure projected and the increase of oil revenues contributed as well”, said the firm.

In light of the perspective adjustment, by the end of 2017, HR Ratings estimates that the sovereign debt, the highest measure of the debt, will drop to 46.2% of the GDP, against 50.1% by the end of 2016.

For HR Ratings the uncertainty associated with the Mexican 2018 presidential election and the NAFTA renegotiation could procure a depreciation of the Mexican peso, increasing in pesos the amount of the debt in dollars and compromising the government debt ratio estimations.


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