S&P Downgrades Mexico, Pemex, and CFE Outlook to Negative Amid Fiscal Strain

S&P Global Ratings has changed the long-term foreign-currency sovereign outlook for Mexico to negative from stable, while affirming its BBB credit rating. This decision, announced on May 12, 2026, cites risks of very slow fiscal consolidation amidst weak economic growth, estimating a one-in-three probability of a downgrade within the next 12 to 24 months. The negative outlook was subsequently extended to state-owned enterprises Petróleos Mexicanos (Pemex) and Comisión Federal de Electricidad (CFE), along with their subsidiaries, which share the sovereign's BBB rating. S&P highlights deteriorating fiscal metrics, including a general-government deficit of 4.9% of GDP in 2025 and projected net public debt rising to 54% by 2029. Significant concerns remain regarding Pemex’s unsustainable capital structure, marked by negative free operating cash flow and heavy reliance on government support totaling nearly $70 billion between 2019 and 2025. Additionally, potential renegotiation risks associated with the US-Mexico-Canada Agreement (T-MEC) serve as a separate downgrade trigger. This move aligns S&P with Moody’s, leaving Fitch as the only major agency maintaining a stable outlook for Mexico.