Mexico may merit a credit-rating upgrade should incoming President Enrique Pena Nieto’s proposals to increase tax revenue and open the energy industry to more private investment succeed, Moody’s Investors Service said.
Latin America’s second-largest economy could be raised to an A3 rating, one level above its current Baa1, Mauro Leos, a credit officer for the region, said at a Moody’s conference in Mexico City today.
Besides a labor bill, introduced by outgoing President Felipe Calderon and set to receive a vote this year, the economic overhauls have the best chance of passing in 2013, and that’s when Moody’s would be most likely to raise the rating, Leos said in an interview after his speech.
“Maybe the most important, because it’s already out there, is the labor reform,” Leos said. The bill signals that “Mexico can make progress in certain areas where little progress has been observed before.”
Leos said that while Mexico currently belongs in a range of Baa2 to A3, that range could shift up to include A1 should the economic overhauls prove effective.
Moody’s last upgraded Mexico from Baa2 in January 2005. It chose not to downgrade the nation when Fitch Ratings Ltd and Standard & Poor’s lowered their ratings by one level each in late 2009 on signs of declining oil output and after a tax increase fell short of what President Felipe Calderon had originally proposed.
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