UPDATE 3-S&P revises Mexico ratings outlook to 'positive'

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By Noel Randewich

MEXICO CITY, July 2 (Reuters) - Standard & Poor's revised Mexico's credit ratings outlook to "positive" from "stable" on Monday, citing growing prospects for tax reform and a lighter external debt burden.

Mexico's President Felipe Calderon sent Congress a long-awaited reform plan last month aimed at boosting government revenues by closing corporate tax loopholes.

"A sustained increase in non-oil tax revenue would accelerate the gradual strengthening of Mexico's financial profile, likely resulting in a higher sovereign rating," the ratings agency said in a statement.

Mexico's tax take is one of the lowest in Latin America and the government depends heavily on oil exports, which are expected to decline in coming years, for about a third of its revenues.

Improved sovereign debt ratings make it cheaper for governments to issue debt. The new S&P outlook affects Mexico's "BBB" long-term foreign-currency debt, as well as the country's "A" long-term local-currency bonds.

Investors bought stocks following the news, pushing the IPC benchmark index .MXX up to a gain of 0.87 percent.

Mexico's peso MEX01 <MXN=> traded at 10.7595 per dollar after the announcement, maintaining a gain of about 0.5 percent for the session. The yield on Mexico's benchmark 10-year peso bond <MX10YT=RR> dipped 4 basis points to 7.65 percent.