S&P affirms Durango

Standard & Poor's said it affirmed its A-(mx) national-scale rating on the State of Durango, United Mexican States and revised its outlook on the rating to negative from stable.

The agency said that the outlook change is based upon the state's operating expenditure growth trend, reflected in poor budgetary performance during 2005 and the first quarter of 2006.

S&P said it anticipates that, in the absence of a tighter expenditure control, Durango's budgetary performance is likely to continue to deteriorate.

Other factors offsetting the State of Durango's rating include limited revenue and expenditure flexibility, a heavy debt burden, which stabilized after the successful completion of a debt-refinancing plan and increasing pension pressures.

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