Is a debt problem brewing in Mexico?

In contrast to the prevailing view that tight credit conditions have been a constraint on Mexican growth, the debt ratio has actually increased at a reasonably sharp pace over the past five years. This does not yet pose an imminent threat to financial stability, but it could cause problems further down the line if sustained. Meanwhile, a rise in foreign holdings of local currency government debt helps to explain why the peso and the local currency bond market have become more vulnerable to external shocks.