Fitch warns of increased governance risk in Mexico
Fitch Ratings warns that Mexico's governance has deteriorated over the last decade, affecting the country's investment climate and increasing uncertainty about the operating environment for key sectors and the economy's post-coronavirus growth trajectory.
Mexico's governance has deteriorated over the last decade, affecting the country's investment climate and increasing uncertainty about the operating environment for key sectors and the economy's post-coronavirus growth trajectory, warns Fitch Ratings.
Without issuing any change on the sovereign rating, currently at BBB- with a stable outlook, it reiterated that the federal government's "unorthodox" decisions have increased credit risks and resulted in negative rating actions for some issuers. Among the most affected sectors are energy, utilities, infrastructure and financial institutions.
The risk firm recapitulated some of the policies that in its opinion have most affected the investment climate in Mexico. Among them, it recalls the cancellation of the Texcoco airport three years ago and the initiative on the cap on bank commissions that, before the current federal Executive took office, was published by Senator Ricardo Monreal and did not go any further. However, most of Fitch's comments are related to the energy and electricity sectors.
The rating agency, which ceased to be requested to rate the debt of Petróleos Mexicanos at the beginning of 2021, stated that the country has one of the lowest scores in the World Bank indicators, when compared to economies in the same BBB category, which implies a moderate risk of default. And even recovered the Bank of Mexico surveys, in which governance has emerged as one of the greatest economic risks since 2017.
