S&P downgrades Mexico sovereign rating on coronavirus fears

Credit ratings agency S&P on Thursday lowered Mexico's sovereign credit rating to BBB from BBB+ due to an expected economic hit from the coronavirus pandemic and a plunge in oil prices, piling pressure on the government to lift the struggling economy.

"The pronounced COVID-19 and oil price shocks, in our view, exacerbate Mexico's already modest growth," S&P said in a statement. Mexico's economy is already in recession and the coronavirus crisis and falling crude prices have battered the outlook.

S&P said it expected Mexican gross domestic product (GDP) to decline between 2% to 2.5% in 2020 and then rebound in 2021 by a little over 2%. "The downgrade reflects our revised expectations that real per capita GDP growth will remain below that of peers with a similar level of economic development," S&P added.

S&P put Mexico's outlook on negative and lowered its long-term local currency sovereign credit rating to BBB+ from A-. Mexico's peso dropped over 1.6% against the dollar following the downgrade.

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