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Bond Market News
Mexico’s Outlook Revised to Negative by S&P
May 13, 2026
Mexico’s outlook was revised to negative from stable by S&P. The outlook change reflects concerns over sluggish economic growth, mounting fiscal pressures, and the risk that government debt could rise faster than expected. Mexico’s GDP growth slowed to just 0.8% in 2025 and is forecast at 1% in 2026. The general government deficit stood at 4.9% of GDP in 2025 and is expected to narrow only gradually with net government debt projected to climb to roughly 54% of GDP by 2029. A major source of fiscal strain is the government’s near-certain support for state-owned enterprises Pemex and CFE, whose weak financial positions continue to create contingent liabilities for the sovereign. While President Sheinbaum has shown more openness to the private sector, implementation has been slow and financing mechanisms remain uncertain. On trade, S&P expects Mexico to retain preferential access to the US market under a renegotiated USMCA, though tensions over drug trafficking, immigration, and energy policy continue to cloud the bilateral relationship and dampen investment sentiment. On the positive side, Mexico’s external position remains solid, supported by the peso’s status as an actively traded currency, low external debt, record exports to the US, and steady remittance inflows. The rating agency noted that the financial sector was well-capitalized with low non-performing assets, and the central bank’s credibility to underpin monetary stability.
Mexico’s bonds traded stable with its 4.5% 2029s at 99.7, yielding 4.6%
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