Mexico
HR Ratings ratifies top credit rating for Monterrey
The agency said it confirmed the HR AAA rating for the regional municipality in northern Mexico due to its financial stability and debt reduction.

 HR Ratings ratified the HR AAA rating for the municipality of Monterrey, the highest in all structured long-term loans contracted with a private bank.

In its report, the agency indicated that the rating is the result of its Stress Target Rate of 86.6%, which increased compared to the previous review of 85.2%. It also noted that they project that the month with the best coverage of debt service would be October 2033.

"Based on our own estimates, we would expect an average nominal increase of 4.8% in the General Fund of Participations of the Municipality for the next five years, from 2020 to 2024," the document reads.

[Mexico's Central Bank: Covid-19 recession could continue through 2021]

The municipality said that good financial management has led to a stable long-term perspective and a gradual decrease in its debt.

"Among the relevant events, the rating agency highlighted the restructuring carried out during 2019, which reduces the variable component of the surcharge, for the payment of ordinary interest," they said.

"With this the municipality of Monterrey manages to maintain the rating with the highest grade on a national scale, which is an indicator of the ability to pay to meet their financial commitments compared to their national peers," they added.

The rating agency said that its analysis was made taking into account a scenario of low economic growth and low inflation. Among the factors examined to reach the decision, the reserve fund, the guarantee of timely payment, as well as interest rate coverage stand out. 

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