Chiapas Secures Banobras Funds

The Mexican State of Chiapas has secured MXP2bn in 3-year funds from Banobras at approximately 8% fixed, according to Moody’s, which assigned a provisional Aa1.mx rating. The loan is a direct obligation of the State of Chiapas and payable through a trust managed by Deutsche Bank. The borrower has pledged 25% of its revenue from the earmarked federal fund Fondo de Aportaciones para el Fortalecimiento de las Entidades Federativas (FAFEF), and 13.19% of federal participation transfers, through an irrevocable instruction to the federal treasury. Moody’s calculates that the cashflow available for debt service from FAFEF and participation transfers will result in minimum monthly debt service coverage of 2.2x over the life of the loan. Under a stress scenario, Moody’s calculates that cashflows available for debt service from FAFEF and participation transfers available for debt service will give minimum monthly debt service coverage of 1.9x over the life of the loan. The minimum level of the reserve fund is estimated to provide approximately one month of additional debt service coverage. Moody’s says the expected performance of the loan demonstrates low volatility, owing to the impact of FAFEF flows, a sufficient amount of pledged federal participation transfers and the stable amortization schedule.