The Fitch ratings agency announced overnight that:
Fitch Downgrades Mexico to ‘BBB-‘; Outlook Stable
For those unfamiliar with rating agency nomenclature this means that Mexico’s debt is now just above what is called ‘junk’ status.
This is profoundly unhelpful. At a time when Mexico, like almost every Latin American country, is facing the challenge of coronavirus and a pile of US dollar debt over which it has almost no control as to cost, it is facing a rating agency saying that the cost of its debt servicing must basically increase through no fault at all of its own.
Well, no, it doesn’t actually say that. The cost of debt servicing is the coupon agreed at time of issuance. That’s not changed in the slightest.
The cost of borrowing more, that has risen, yes. But just because governments like to roll over their debt doesn’t mean that there’s not a difference between these two things.
This is argument that this can best be described as callous: Fitch is very clearly putting the interests of creditors above the lives of the people of Mexico.
It can also be described as profoundly unjust: developed country debtors will profit from the crisis at cost to a developing country.
It could be argued it represents a failed paradigm when governments are all that are now underpinning capitalism but are being downgraded in the interests of rentier capitalists, nonetheless.
But most it could just be called wrong. It is a symbol of all that is profoundly misguided, amoral and exploitative in the world of financial capitalism.
I suggest that the rating agencies be subject to enforced silence on government debt right now.
Or as this should be translated – I don’t like what people are saying so we must ban them from saying it. For that free speech thing is just so neoliberal, isn’t it?