Fitch Affirms Buenos Aires Ratings

Fitch has affirmed the City of Buenos Aires with a stable outlook. The agency leaves the ratings of the city’s euro medium-term note program and long-term foreign and local currency at B. The ratings, says Fitch, reflect strengths in the city’s credit profile, including its large and diversified economy, an adequate liquidity position, sustainable debt levels and manageable debt-service repayment schedule. Also reflected is the city’s financial flexibility which is due to a majority portion of its total expenditure being financed with local sources (88%), as opposed to only 12% representing federal transfers. Eduardo D’Orazio, an analyst at Fitch, says the city is making sound decisions regarding its debt. Since restructuring in 2002, the city has met debt obligations in a timely fashion, notably during 2006 and 2007, when the highest levels of amortization occurred. This is reflected in a recent improvement in debt ratios. As of May 2008, only two series out of five originally issued are outstanding. One of the series outstanding is due in 2009 and the second in 2011. Together, they total $267m in debt, says D’Orazio. “The city was about to issue $500m in debt for public works, but decided to postpone it due to the global financial crisis, which I think is a good decision,” he adds.