Mexico's investment-grade credit rating was lowered by Fitch Ratings as tumbling oil output and the worst recession since the 1930s swell the budget deficit.

Fitch cut Mexico's foreign debt rating one level to BBB, the second-lowest investment grade and in line with countries including Russia and Thailand, and changed the outlook to stable from negative. The downgrade was the first by Fitch since it gave Mexico an initial rating of BB in 1995 and the first by any ratings company since Standard & Poor's cut it in the wake of the 1994 peso devaluation.

Mexico, which in 2000 became the second country in Latin America to win an investment-grade rating as the North American Free Trade Agreement boosted exports, has been the hardest hit in the region by the global recession that began in the U.S. President Felipe Calderon failed to pass a consumption tax aimed at offsetting declining oil proceeds and stemming a deficit that JPMorgan Chase & Co. says will reach the widest in two decades.

"The rating that Mexico got over the last few years, ahead of Brazil and ahead of Colombia and ahead of Peru, which was all right at the time, now seems a bit overblown," said Claudio Loser, former Western Hemisphere director for the International Monetary Fund. "It stayed at a plateau while the rest of the world was moving forward. That says Mexico has lost."

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