S&P affirms Michoacán

Standard & Poor's said it affirmed its mxA+ national-scale rating on the State of Michoacán, United Mexican States.

At the same time, the rating was placed on CreditWatch with negative implications, the agency said, adding that this action is attributable to the aggressive indebtedness levels approved by the state congress, which will allow the executive branch to issue up to Mexican peso 5.5 billion in new debt in the final months of 2007 and possibly into 2008.

If the state requests the whole amount, direct debt will reach 81.8% of 2007 discretionary revenue, which is considerable compared to 26.7% registered as of June, the agency said, noting that debt service during fiscal 2006 reached a manageable 5.4% of discretionary revenue.

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