Moody’s de Mexico upgraded the Global (local currency) and National Scale (Mexico National Scale) debt ratings of the following ten enhanced loans:
- State of Jalisco, MXN 1,000 million loan from Banobras (original face value) to Baa2/Aa2.mx from Baa3/Aa3.mx
- Municipality of Nicolas Romero, MXN 180 million from Interacciones (original face value) to Ba2/A2.mx from Ba3/A3.mx
- State of Nuevo Leon, MXN 360 million from Banobras (original face value) to Baa2/Aa2.mx from Baa3/Aa3.mx
- Municipality of Tuxpan, MXN 220 million from Interacciones (original face value) to Ba3/A3.mx from B1/Baa3.mx
- State of Veracruz, MXN 1.22 billion from Banobras (original face value) to Baa2/Aa2.mx from Baa3/Aa3.mx
- State of Veracruz, MXN 1.5 billion from Multiva (original face value) to Baa3/Aa3.mx from Ba1/A1.mx
- State of Veracruz, MXN 1.5 billion from Interacciones (original face value) to Baa3/Aa3.mx from Ba1/A1.mx
- State of Veracruz, MXN 4.5 billion from Banorte (original face value) to Baa3/Aa3.mx from Ba1/A1.mx
- State of Veracruz, MXN 4.6 billion from Banobras (original face value) to Baa3/Aa3.mx from Ba1/A1.mx
- State of Veracruz, MXN 695 million from Interacciones (original face value) to Baa3/Aa3.mx from Ba1/A1.mx
RATINGS RATIONALEThe rating actions follow the strengthening of debt service coverage (DSC) under the base case and stress case scenarios for these enhanced loans. Moody’s reviewed cash flow analyses of the rated enhanced loans to estimate future monthly DSC ratios. From this review, DSC for these enhanced loans improved, allowing for greater uplift from the issuer ratings as described in the Enhanced Municipal and State Loans in Mexico rating methodology (refer to https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_172119). As a result, today’s rating actions reflect the lower probability of default.WHAT COULD CHANGE THE RATING UP/DOWNGiven the links between the loans and the credit quality of the obligors, an upgrade of an issuer rating would likely result in an upgrade of its enhanced loan ratings. The ratings could also face upward pressure if observed and projected debt service coverage ratios increase above current thresholds.Conversely, a downgrade of an issuer rating could also exert downward pressure on the debt ratings of the loans. In addition, the ratings could face downward pressure if debt service coverage levels fall materially below our expectations.The principal methodology used in these ratings was Rating Methodology for Enhanced Municipal and State Loans in Mexico published in June 2014. Please see the Credit Policy page on www.moodys.com.mx for a copy of this methodology.The period of time covered in the financial information used to determine Mexican Sub-Sovereign Enhanced ratings is between 01 January 2010 and 31 December 2014.Moody’s National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody’s global scale ratings in that they are not globally comparable with the full universe of Moody’s rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a “.nn” country modifier signifying the relevant country, as in “.za” for South Africa. For further information on Moody’s approach to national scale ratings, please refer to Moody’s Rating Methodology published in June 2014 entitled “Mapping Moody’s National Scale Ratings to Global Scale Ratings”.
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