Mexican credit rating agency HR Ratings lowered Mexico's long-term sovereign rating from BBB+ to BBB, with a stable outlook, on October 15, 2026. The agency cited deteriorating public finances and weaker expected growth. It affirmed the short-term rating at HR3 and also cut Pemex from BBB+ to BBB, according to Bloomberg Línea and the EFE news agency. The Finance Ministry replied that Mexico keeps its investment grade with all eight agencies that rate its debt.
What HR Ratings decided
| Rating | Before | Now |
|---|---|---|
| Mexico, long term (global scale) | HR BBB+ (G) | HR BBB (G) |
| Outlook | Stable | Stable |
| Mexico, short term | HR3 (G) | HR3 (G), affirmed |
| Pemex, global scale | HR BBB+ (G) | HR BBB (G), stable outlook |
HR Ratings is a Mexican agency recognised by the country's securities regulator. Its statements are published at hrratings.com and through the Mexican Stock Exchange's filings system. The October review was expected: in May the agency said it would not change the rating before then.
Why the rating was cut
- A high deficit for several years: public-sector borrowing requirements have not fallen below 4% of GDP. HR projects 4.6% of GDP in 2026 and 4.7% in 2027, according to MVS Noticias.
- Rising debt: the historical balance of public debt would reach 54.5% of GDP at the end of 2026 and could rise to 61.2% in 2030 and 65.6% in 2033.
- Rigid spending: spending is growing faster than revenue, and debt service costs are adding pressure.
- Low growth: HR estimates the economy will grow 1.3% in 2026 (the ministry expects 1.5%) and lowered its long-term average to 1.5% a year, from 1.85%.
| HR Ratings projection | Figure |
|---|---|
| Broad deficit (PSBR) 2026 | 4.6% of GDP |
| Broad deficit (PSBR) 2027 | 4.7% of GDP |
| Public debt, end of 2026 | 54.5% of GDP |
| Public debt, 2030 | 61.2% of GDP |
| Public debt, 2033 | 65.6% of GDP |
| GDP growth 2026 | 1.3% |
| Long-term growth | 1.5% a year |
According to EFE, HR considered efforts to reduce the deficit since its 2024 peak insufficient, because spending is rising faster than revenue. The decision came days after the Chamber of Deputies approved the 2027 Revenue Law.
Why Pemex was cut too
Pemex's rating depends on that of the Mexican state, which backs it. When the sovereign rating fell, HR lowered the oil company to the same level. The agency acknowledged the reduction in Pemex's gross debt and government support, but expects the company to keep needing help to pay its debt until at least 2029. Its total revenue fell 8.6% in 2025, according to Bloomberg Línea.
What a BBB rating means
Ratings measure the risk that an issuer will not repay its debt. On the global scale, BBB is still investment grade, meaning debt considered moderately risky. Below BBB- is so-called speculative grade. After the cut, Mexico is two notches above that line on HR's scale.
| Notch | Category |
|---|---|
| AAA, AA, A | High investment grade |
| BBB+ | Investment grade (Mexico's previous HR rating) |
| BBB | Investment grade (Mexico's current HR rating) |
| BBB- | Lowest investment-grade notch |
| BB+ and below | Speculative grade |
A downgrade can make borrowing more expensive for the country and for companies tied to its rating, although the effect depends on what the agencies with more weight in international markets, such as S&P, Moody's and Fitch, do.
How the Finance Ministry responded
The Ministry of Finance and Public Credit said Mexico keeps investment grade with all eight agencies that rate its sovereign debt and that HR itself acknowledged fiscal consolidation and progress at Pemex, according to Índice Político. La Razón reported that the agency does not expect another immediate change under its current scenario.
Where the Mexican economy stands
| Indicator | Figure | Source |
|---|---|---|
| Annual inflation, September 2026 | 3.45% | INEGI |
| Core inflation, September | 3.75% | INEGI |
| Banxico interest rate | 6.5% since June 2026 | Banxico |
| Expected growth 2026 | 1.3% (HR) and 1.5% (Finance Ministry) | HR and Finance Ministry |
The inflation figure is in the INEGI bulletin. For household income context, see the minimum wage in Mexico in 2026.
The recent history of Mexico's HR rating
| Date | Decision |
|---|---|
| Late 2025 | HR kept Mexico at HR BBB+ (G) and moved the outlook to stable |
| May 2026 | HR said it would not change the rating before its October review and that its main concern was low growth |
| October 15, 2026 | Cut to HR BBB (G), stable outlook |
The downgrade came days after the Chamber of Deputies approved the 2027 Revenue Law, with revenue of 10.6 trillion pesos and a deficit analysts described as "complex," according to Bloomberg Línea.
What changes for ordinary people
- Interest rates: if investors demand more to lend to the government, that cost can pass through to business and household loans.
- Exchange rate: a downgrade can weigh on the peso, although a single local agency rarely moves the market on its own.
- Budget: a government paying more interest has less room for social spending or investment.
For now, the effect depends on whether other agencies follow. To see what the lawmakers who approve the budget earn, see how much a member of Congress earns in Mexico.
Frequently asked questions
What rating did HR Ratings give Mexico?
HR BBB (G) long term, with a stable outlook. It was previously HR BBB+ (G).
Did Mexico lose investment grade?
No. BBB is still investment grade and, according to the Finance Ministry, all eight agencies that rate Mexico keep it in that category.
Why was the rating lowered?
Because of a deficit that does not fall below 4% of GDP, rising debt and low economic growth.
What happened to Pemex?
HR also lowered it from BBB+ to BBB, because its rating is tied to the government's.
