By JULIA PRESTON

             n a surprisingly broad endorsement of Mexico's economic strength
             and financial management, Moody's Investors Service raised the
          country's credit rating today to investment grade for the first time.

          The announcement was a powerful vindication of President Ernesto
          Zedillo's efforts to convince investors that Mexico will make it through
          national elections this year without the kind of economic disaster that has
          marred every presidential turnover for the last two decades.

          "It's a signal that allows the investor to say, I can assume that the overall
          economic context is a sound one," said Finance Minister José Angel
          Gurría Treviño.

          With the upgrading from the junk-bond category, Moody's moved
          Mexico into the league of countries that present a very low risk of failing
          to pay their debts. Now the government and many private Mexican
          corporations will have access to a wider range of financing at lower rates.

          The new rating clears the way for many large institutions in the United
          States to buy Mexican bonds, which they were barred from doing
          without the investment grade status.

          Moody's pointed to Mexico's "dynamic export sector" and successful
          integration with the United States economy since the 1994 North
          American Free Trade Agreement. Because Mexico's foreign debt is
          clearly manageable, Moody's said, "a slowdown in the U.S. economy
          should not be seriously disruptive."

          The agency was also unusually optimistic about the prospects for stability
          through the balloting on July 2 and the handing over of power Dec. 1.
          "The widespread consensus on the importance of sound financial policies
          combined with a vibrant multiparty democracy provides additional
          support to continued fiscal discipline," Moody's said.

          Mr. Zedillo, a Yale-trained economist, has focused economic policy for
          the last year on taking Mexico through the end of his term without a
          devastating peso crash like the one that he faced in his first days in office.
          While foreign reserves stand at $31 billion, the country has already
          refinanced the foreign debt scheduled to come due this year, and faces
          "very comfortable" repayments next year, Mr. Gurría said.

          Moody's decision immediately began to push interest rates down. The
          rate on the benchmark 28-day Mexican treasury bonds dropped to
          13.95 percent, the lowest since the period before the crisis began in
          December 1994. As recently as September 1998, in the middle of a
          crisis created by turmoil in Russia and Brazil, the rate had soared to
          41.33 percent.