Moody’s Downgrades Mexican State of Nayarit

Moody´s has downgraded the Mexican state of Nayarit to Baa3 from Ba1 with a stable outlook. “The downgrade reflects the state’s uneven financial performance and negative liquidity position, which limit financial flexibility,” the agency says. The downgrade also reflects an aggressive capital plan for which the state plans to borrow MXP1.2bn. “This new debt, combined with the gradual deterioration in financial performance experienced in recent years, will exert significant pressure on the state’s budgetary flexibility,” the agency adds. Should the debt materialize, Moody’s expects debt service cost, which was equivalent to 2% of operating revenues in 2007, to increase to 6%, while the outstanding debt balance would increase to 13% of total revenues this year, compared to 4% in 2007, the agency adds.