S&P affirms Mexico

Standard & Poor's said it affirmed the United Mexican States' BBB long- and A-3 short-term foreign-currency sovereign credit ratings and confirmed its A long- and A-1 short-term local-currency sovereign credit ratings. The outlook is stable.

The agency said the ratings are supported by growing macroeconomic stability including low inflation, a flexible exchange rate and deepening financial markets; improving external liquidity and an improving debt profile - more than two-thirds of the central government's debt stock is now in local currency and about 50% of its domestic debt is at fixed nominal interest rates of one year or longer.

The ratings are constrained by the lack of political consensus on policies to boost growth prospects and strengthen the government's tax base; the government's narrow non-oil tax base, around 11% of GDP, and resulting fiscal inflexibility; and a weak institutional framework that constrains GDP growth prospects, the agency said.

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