S&P Global Revises Mexico Credit Outlook to Negative Amid Rising Debt Concerns

S&P Global Ratings revised Mexico’s sovereign credit outlook to negative from stable while affirming the country’s BBB foreign currency and BBB+ local currency long-term credit ratings. The agency also maintained Mexico’s A-2 short-term sovereign ratings, citing concerns over fiscal pressures, weak economic growth, and rising government debt.

The ratings agency warned that Mexico faces growing fiscal challenges as slow economic expansion limits the government’s ability to reduce budget deficits. S&P noted that continued financial support for state-owned energy firms Petroleos Mexicanos (Pemex) and Comision Federal de Electricidad (CFE) is increasing fiscal rigidity and putting additional pressure on public finances.

Mexico’s general government deficit reached 4.9% of GDP in 2025, following 5.2% in 2024. S&P expects the deficit to remain elevated at 4.8% in 2026, highlighting concerns about delayed fiscal consolidation and higher borrowing costs. The agency forecasts Mexico’s net government debt will climb to around 54% of GDP by 2029, up from 49% in 2025, while interest payments are projected to exceed 15% of government revenue on average during the forecast period.

S&P stated that Mexico could face a sovereign credit downgrade within the next 24 months if authorities fail to stabilize debt levels and reduce fiscal deficits. The agency also warned that potential disruptions in trade relations with the United States could weaken Mexico’s external position and economic stability, especially amid uncertainty surrounding the renegotiation of the United States-Mexico-Canada Agreement (USMCA).

Mexico’s economy grew only 0.8% in 2025, slowing from 1.1% in 2024 and 3.3% in 2023. During the first quarter of 2026, GDP growth was recorded at just 0.2% year-on-year. S&P forecasts Mexico’s economy will expand by only 1% in 2026 as rising energy prices and external uncertainties continue to weigh on growth prospects.