Moody's upgrades Durango

Moody's Investors Service said it upgraded the State of Durango's issuer rating to A1.mx from A2.mx on the Mexico national scale and to Ba1 from Ba2 on the global local-currency scale due to improvement in financial performance and position achieved by the state over the last two years, as well as the positive effect of the last two debt refinancings on its debt profile.

Early this year Durango once again refinanced its debt, extending the principal amortization-term from 15 to 20 years and reducing peak debt service to 2% of annual revenues. This refinancing and that of 2005 have strengthened the state's debt profile after the increases in short- and long-term debt levels experienced from 2002 to 2004, the agency said.

At year-end 2006, the state's direct debt reached an amount equal to 17.4% of that year's revenues, compared with 22.9% in 2004. Moody's said that in the absence of additional borrowing plans, the burden should decline again in 2007. In addition, the state's indirect and guaranteed debt remains moderate, self-sufficient and, and more importantly, guaranteed by the respective municipalities' participation revenues.

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