News Column

Moody's affirms the ratings of Guasave and revises its outlook to stable from negative

July 17, 2014



Moody's de Mexico affirmed the Ba3 (global scale, local currency) and Baa1.mx (Mexico national scale) ratings of the municipality of Guasave. At the same time, MoodyÂīs revised Guasave's outlook to stable from negative.

RATINGS RATIONALE

The municipality of Guasave managed to redress its finances in 2013 and

posted positive operating results equivalent to 2% of operating

revenues. The municipality's consolidated results also improved in 2013

with Guasave posting its first cash financing surplus in the last 4

years. The stable outlook reflects the municipalityÂīs capacity to revert

the deterioration seen in 2012 and Moody's view that Guasave is somehow

better positioned to maintain a stable trend within its rating category

in the near to medium term.

In 2013, Guasave improved its liquidity position to -1.3% of total

expenditures from -9.6% in 2013. The municipalityÂīs liquidity position

remains tight but above the median Ba3 rated peers.

Debt levels as a percentage of operating revenues are expected to remain

stable at around 42% of operating revenues. Debt service costs are

estimated to reach a maximum of 4% of total revenues in 2014, a low level.

The municipal water company (JUMAPAG) exerted significant expenditure

pressures on the municipality in 2012, however we do not expect at this

stage that JUMAPAG will require similar support in the near future.


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Source: EMBIN (Emerging Markets Business Information News)


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