The rating agency indicates one of three possibilities of a cut within a period of six to 12 months, on a sovereign rating that remains two levels above Investment Grade.

Moody's has changed its outlook on Mexico's sovereign rating to negative in light of the weakening of the institutional framework and policy formulation that could undermine fiscal and economic results.

In his view, “the increased rigidity of public spending and the deterioration in debt affordability make fiscal consolidation difficult after the increase in the public deficit this year.”

Mexico's sovereign rating at Moody's is "Baa2," which indicates two levels above investment grade, and currently has a negative outlook that indicates one in three possibilities of a cut within a period of 6 to 12 months.

“Mexico’s constitutional reform could also weaken the checks and balances of the judicial system, with a potential negative impact on the country’s economic and fiscal strength,” they said.

In a statement, Moody's said: "While our assessment of the quality of institutions in Mexico is already low compared to rating peers, particularly with regard to the rule of law and control of corruption, we will assess whether further deterioration in the policymaking framework and the independence of the judiciary could limit the government's ability to address growing credit challenges."

He also cited "contingent liabilities" stemming from the heavily indebted state oil company Pemex that could complicate the government's balance sheet.