Moody's rates Morelos loan Baa2, Aa2.mx

Moody's Investors Service said it assigned an Aa2.mx national scale debt rating and Baa2 global scale and local currency debt ratings to the Mexican State of Morelos' Ps. 220 million bank loan due 2015 held by BBVA Bancomer.

The loan is to be paid through a master trust established in 2001, with Banco Santander Serfin as paying trustee, the agency said. This loan is payable under a loan agreement distinct from those entered into for other obligations of the state.

All debt obligations issued under the master trust are payable from assigned shares of the 16.4% of the state's participation revenues which have been committed to the trust. The state has no direct debt outside the trust, the agency said.

Proceeds will be used to purchase and prepare lands needed to complete segments of the Autopista Siglo XXI, a highway which is to connect the Gulf of Mexico to the Pacific coast via Morelos. Once the desired land is purchased, the state plans to select a concessionaire to carry out the highway construction. The concessionaire will be expected to make an up front payment to the state equivalent to the amount borrowed, the agency said.

The state government intends to use these funds to prepay the loan - as is allowed by the loan contract - and expects this to occur before the end of the current administration's term in September 2006, the agency said.

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