Moody’s puts Mexico on negative outlook

Russia, S. Africa and Brazil now more pessimistic

Moody’s credit rating agency has changed the outlook for Mexico’s debt rating to negative from stable, citing low oil prices and slow economic growth.

But the agency maintained Mexico’s A3 rating on senior debt, indicating very low risk.

The agency said it was worried about the possible effect on government budgets of bailing out the country’s troubled state oil company, Pemex.

Moody’s said in a statement Thursday that the Mexican government was committed to fiscal restraint, but it was unclear whether it could achieve that in the current environment.

It noted that Mexico federal government debt rose to 34.4 percent of GDP in 2015 from 27.9 percent in 2011. But that could rise to over 40 percent of GDP if Pemex is forced to turn to the government for financing.

Mexico’s government oil commission says the country’s proven reserves of oil and gas dropped by a startling 21 percent in 2015.

The commission said Thursday that combined oil and gas reserves amounted to 10.24 billion barrels of crude equivalent at the end of 2015, compared to 13 billion barrels at the end of 2014. Mexico’s state-owned oil company has been thrown into crisis by the drop in world oil prices.

The drop in revenue and temporary cash-flow problems have led the company to cut back on exploration.