Credit FAQ Looks At Mexico's 2008 Growth Prospects

NEW YORK March 11, 2008 - Standard & Poor's Ratings Services today issued an article, entitled "Credit FAQ: The Outlook For Mexico In 2008," that examines growth prospects for the United Mexican States in 2008 and the possible impact of energy sector reform on the sovereign.

According to credit analyst Joydeep Mukherji, Standard & Poor's does not expect Mexico's sovereign ratings to be affected by the downturn in the U.S. economy and the resulting deceleration in GDP growth in Mexico. "The combination of macroeconomic stability, the development of domestic capital markets, and the timely approval of tax reform in 2007 should sustain market confidence and the current sovereign ratings during a period of sluggish economic growth in 2008," he said.

The Mexican Congress is likely to debate energy sector reform later this year, including steps to strengthen Petroleos Mexicanos (PEMEX; the national oil and gas company). Such reform, along with steps to boost private investment in limited segments of the energy industry, could help staunch the decline in oil production in recent years.

Mr. Mukherji explained that there is considerable uncertainty about the details of potential reform in the energy sector and, hence, on the impact it may have on the economy and on Mexico's credit rating in the coming years. Modest energy reform will help Mexico sustain its current credit rating, but could fail to address the deeper obstacles to faster growth in the country as a whole.

"The key factor is whether potential energy sector reform will lead to other reform that could boost productivity growth across the economy, raising GDP growth and potentially strengthening the sovereign's credit rating," noted Mr. Mukherji. "From a political angle, it is easier to approve reform that gives more money to PEMEX, but that may be a modest improvement compared with the entire range of reform that could affect the energy sector," he concluded.

The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.

Media Contact:

David Wargin, New York (1) 212-438-1579
david_wargin@standardandpoors.com 

Analyst Contact:

Joydeep Mukherji, New York (1) 212-438-7351

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