Moody's lowers Monterrey

Moody's Investors Service said it has lowered the issuer ratings of the municipality of Monterrey to A1.mx (Mexico national scale rating) and Ba1 (global scale, local currency) from Aa3.mx and Baa3, respectively.

The outlook is stable.

Moody's said the rating change reflects financial deterioration spurred by an increase in personnel costs as well as the continuation of an aggressive capital program. In 2004, personnel expenditures increased by almost 50% compared to the previous year. The municipality's capital plan, on the other hand, continued as planned, leaving little room to absorb the significant increase in operating expenditures.

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