Mexico’s judicial reform could hurt sovereign rating, Moody’s warns Reuters

MEXICO CITY (Reuters) – Mexico’s sweeping judicial overhaul passed by the Senate on Wednesday could have significant implications for the nation’s sovereign credit rating, Moody’s (NYSE: ) Ratings warned in a report.

The reform, which calls for judges to be elected by popular vote, will erode checks and balances and could undermine Mexico’s economic and fiscal strength, Moody’s warned.

Incumbent President Andres Manuel Lopez Obrador, who has often clashed with high-ranking judges, has repeatedly argued that reform is vital to restoring the integrity of Mexico’s judiciary and ensuring it serves the people rather than the interests of elites and criminals .

However, trade allies such as the United States and Canada have already expressed concern about the measure.

The reform risks being challenged by both countries, particularly under the USMCA trilateral trade agreement, Moody’s said.

Another reform proposed by Lopez Obrador, which would eliminate a number of independent regulators, would make the nation’s otherwise well-positioned infrastructure sector less attractive for private investment, the credit agency said.

Legal uncertainty is likely to affect sectors that rely most on concessions and heavy investment, such as mining and telecommunications, Moody’s added.