UPDATE 3-Fitch boosts outlook for Mexico debt ratings

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By Noel Randewich and Jason Lange

MEXICO CITY, March 29 (Reuters) - Fitch Ratings improved its outlook on Mexico's long-term debt ratings on Thursday to "positive" from "stable," encouraged by a landmark pension reform seen as clearing the way for an overhaul of tax laws.

The better outlook applies to the country's "BBB" long-term foreign currency issuer default rating and "BBB+" long-term local currency issuer default rating, Fitch said in a statement.

The new outlook means Fitch is more likely to upgrade its rating on Mexico over the next two years. Fitch also affirmed the current ratings, as well as the country ceiling rating of "A-".

Fitch said its outlook reflected the passage in Congress this week of an overhaul of the public sector pension system, known as ISSSTE, which it said creates momentum for other economic reforms.

New President Felipe Calderon is expected to try to convince Congress to pass deep changes to tax laws this year to increase government revenues, which Fitch said would make Mexico more credit-worthy. Calderon's party lacks a majority in Congress.

"The recent passage of the ISSSTE reform sends a positive signal regarding the ability of the new administration to make headway in a divided Congress," Fitch analyst Shelly Shetty said in a statement.

Mexico's financial markets surged on the news.