Standard & Poor's on Tuesday lowered Mexico's sovereign credit outlook to negative from stable, adding that a downgrade could happen in the next two years if the government's debt or interest burden deteriorated.
Mexico's peso slumped on the news, to trade nearly 1 percent lower against the dollar, while the IPC stock index fell more than 1 percent.
Standard & Poor's said in a statement it affirmed Mexico's 'BBB+/A2' foreign currency and 'A/A1' local currency sovereign credit ratings but added it saw "an at least one-in-three possibility of a downgrade over the next 24 months."
The ratings agency said it expects government debt to rise to an average of 4 percent of gross domestic product per year over the next three years.
It expects GDP to expand by just over 2 percent in 2016, and roughly 3 percent between 2017 and 2019, if growth in the neighboring United States remains stable.