Fitch downgrades Mexico

Fitch Ratings said it downgraded Mexico's long-term foreign-currency and local-currency issuer default ratings to BBB from BBB+ and revised the outlook to stable from negative.

The downgrades reflect the combination of the increased risk to the sovereign's public finances from Pemex's deteriorating credit profile, the agency said, together with ongoing weakness in the macroeconomic outlook.

Those weaknesses are exacerbated by external threats from trade tensions, some domestic policy uncertainty and ongoing fiscal constraints, Fitch said.

The impact of the contingent liability represented by Pemex weighs increasingly heavily on the sovereign credit profile, as evidenced by a two-notch downgrade of Pemex to BBB- from BBB+ in January, the agency said.

Growth continues to underperform, Fitch said, and downside risks are magnified by threats by U.S. President Trump to impose tariffs on Mexico.

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