Prognosis negative for Mexico. So says Fitch Ratings.
After a no vote on a new airport was reached this week in a referendum that president-elect Andrés Manuel López Obrador (aka AMLO) put on a special ballot, investors turned a bit sour. Elected this summer, AMLO takes over the presidency in December.
Mexico’s sovereign credit rating is still investment grade, but the outlook has slipped from stable to negative, the rating agency said on Wednesday. The stalled Mexico City airport project, one AMLO says is mired in dirty money, is just part of the problem.
There are risks that the follow-through on previously approved reforms, for example in the energy sector, could also stall and that other policy proposals will result in lower investment and growth than currently expected. His sole decision to cancel the construction of a new airport for Mexico City and potentially build one elsewhere—a failing bid—sent a negative signal to investors.
Also, new proposals for large investments by state-owned oil company Pemex, whose creditworthiness have been under pressure due to debt burdens, are adding to the growing risk related to state liabilities, say Fitch analysts led by Charles Seville in New York.