Mexico’s Quintana Roo Downgraded

Moody’s has downgraded the State of Quintana Roo to Ba2 from Ba1 on a global scale and has revised the outlook to negative from stable. The downgrade reflects the deterioration of the state’s financial performance, including sizeable fiscal deficits in the last 2 years, recent increases in the level of debt and a contraction in net working capital. The state faces significant challenges to address its finances in the near to medium term, Moody’s says. The rating could also be downgraded further if the state does not refinance its short-term debt with longer-term debt. The ratings agency also downgraded the ratings of 7 loans given to the state, via Idefin, as the performance of the loans could be affected. Idefin is a quasi-government institution created by the state of Quintana Roo to assist the state and municipalities to access credit. The loans were downgrade to Aa3 from Aa2 on a national scale. The loans total MXP4bn and come from Banamex, Banorte, HSBC, Interacciones and Scotiabank.