Mexico’s sovereign debt is getting the kind of treatment usually reserved for countries with far worse credit scores. Bond traders are now pricing Mexican government paper as if it were junk, a direct consequence of the roughly $130 billion the government has funneled into keeping Petroleos Mexicanos, the state-owned oil behemoth, from collapsing under its own weight.
On May 21, Moody’s made it official by downgrading Mexico one notch to Baa3, the lowest rung of investment-grade territory. One more slip and the country falls into speculative grade, a classification that would trigger forced selling by institutional investors whose mandates prohibit holding junk-rated debt.
The numbers behind the bailout
Government support for Pemex in 2025 alone clocked in at approximately $35 billion, equivalent to 1.9% of GDP.
Funding that kind of commitment required Mexico to hit the bond market hard. The country raised over $41 billion in hard-currency sovereign bonds during 2025, making it the largest emerging market borrower that year. Most of that capital went straight toward managing Pemex’s debt load and keeping the company liquid.
