New York, January 06, 2005 -- Moody's Investors Service upgraded Mexico's key foreign currency ratings from Baa2 to Baa1. Moody's said the rating upgrade reflects the continued reduction in Mexico's external
vulnerability indicators as evidenced by on-going improvement in a number of external debt ratios and the presence of a strong international liquidity position. These conditions have led to reduced vulnerability of
Mexico to external shocks. Mexico continues to benefit from deepening economic and financial integration with the US, and a stable political consensus on the need for maintaining fiscal discipline.
Despite the maintenance of fiscal discipline, Moody's changed the outlook on Mexico's Baa1 local currency government bond rating to stable from positive because Moody's does not expect any significant improvement in the government's medium-term fiscal performance, something that would be required in the future for both the foreign and local currency ratings to go up. The outlook on the government's local currency issuer rating was also changed to stable from positive.
As a result of this action, the foreign currency country ceilings for bonds and bank deposits were upgraded to Baa1 from Baa2. Also, the rating of foreign currency government bonds issued by the United Mexican States was raised to Baa1 from Baa2. The government's foreign currency issuer rating was also upgraded to Baa1 from Baa2. All these ratings have a stable outlook.
Moody's also affirmed Mexico's Aaa local currency guideline and the Mexican government's Aaa.mx national scale rating.