Moody's: Mexico's domestic political and economic concerns eclipse NAFTA risks

"Mexico's upcoming presidential election may pose a more significant challenge to credit than the risk of an unsuccessful NAFTA renegotiation," Moody's Investors Service said in a recent report on Wednesday.

Key quotes:

• The populist campaign could significantly stall the implementation of major reforms, including opening the energy sector to private investment.
• The political transition may also slow public infrastructure investment as any new administration takes time to establish its infrastructure priorities and build up a pipeline of projects.
• NAFTA renegotiations, meanwhile, are unlikely to disrupt trade, and may present an opportunity for Mexico.
• Moody's cannot fully rule out risks to Mexican exporters, especially for firms in the car manufacturing sector.
• An unfavorable renegotiation would curb growth, creating negative spillover effects for the local economies of the country's top exporting states.
• However, initial proposals could actually stimulate industrial development.