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S&P downgrades Mexico, Trinidad and Tobago amid coronavirus outbreak


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S&P downgrades Mexico, Trinidad and Tobago amid coronavirus outbreak

S&P Global Ratings on March 26 downgraded the ratings on Mexico and Trinidad and Tobago while changing the outlook on Colombia to negative from stable.

The rating agency lowered its long-term foreign currency credit rating on Mexico to BBB from BBB+ and its local currency rating to BBB+ from A-, citing the economic impact of the coronavirus on Mexico and low oil prices.

Earlier in March, major oil producers failed to agree on additional output cuts in the face of falling global demand partly attributable to the coronavirus, which resulted in a price war between Saudi Arabia and Russia.

The Mexican economy is expected to contract for the second year in 2020, with real GDP falling by about 2% to 2.5%. Growth is projected at a little above 2% for 2021 and at 1.8% for 2022-2023.

The economy of the U.S., the largest trading partner of Mexico, has also suffered as a result of the outbreak, S&P Global Ratings noted. Mexico's fiscal deficit is expected to average 3% of GDP in 2020-2023, with net general government debt projected to rise toward 49% of GDP in 2023 from 42% in 2019.

The outlook is negative, reflecting chances of a downgrade over the next 12-24 months due to ineffective Mexican policy execution, potentially weakening public finances or higher off-budget contingent liabilities, the rating agency said.

Trinidad and Tobago

S&P Global Ratings downgraded its long- and short-term foreign and local currency ratings to BBB-/A-3 from BBB/A-2 and revised down Trinidad and Tobago's transfer and convertibility assessment to BBB from BBB+.

Lower oil and gas prices would hit government revenues and raise government debt levels, the rating agency said. Real GDP per capita is estimated at about $16,600 in 2020, which is 19% lower than in 2014.

The outlook is stable, reflecting the agency's view that the government's liquid external assets will help offset the effect of lower hydrocarbon prices.


S&P Global Ratings revised its outlook on Colombia to negative from stable, citing downside risks to its fiscal and external metrics amid the coronavirus outbreak and low oil prices.

Declining oil export earnings would increase Colombia's current account deficit toward 5.6% of GDP in 2020 from 4.4% in 2019, according to the rating agency. Its net general government debt is expected to approach 47% of GDP by 2023. GDP growth is estimated at around 0.7% in 2020, down from 3.2% previously projected, likely to pick up to 3.4% on average during 2021-2023.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.