Moody’s downgrades Mexican government’s debt rating

MEXICO CITY (AP) — Moody’s Investors Service has downgraded Mexican government debt from Baa1 to Baa2, citing concerns about debt servicing costs and Mexico’s support for the state-owned oil company. Baa2 is still one step above the lowest investment-grade rating. Moody’s said in a statement Friday that “Mexico’s debt affordability remains consistently weaker than that of similarly rated peers and is likely to further deteriorate given the higher interest rate environment.” It also said “Mexico’s fiscal prospects will be adversely affected by … increased expenditure rigidity related to recurrent support to state-owned enterprises, particularly Pemex, increased pension expenditures, and earmarked capital spending to flagship projects.”