Moody's lowers Veracruz

Moody's de Mexico said it downgraded the issuer rating of the State of Veracruz to A2.mx from A1.mx while Moody's Investors Service said it downgraded the issuer rating of the State of Veracruz to Ba2 (global-scale, local currency) from Ba1.

At the same time, the issuer ratings have been placed under review for possible downgrade, the agency noted.

According to Moody's, the rating action reflects three developments:

• The misalignment of revenue and expenditure growth, leading to the recording of cash financing requirements;

• Current borrowing plans that are expected to trigger increases in debt and debt servicing levels above the median levels for Ba rated Mexican states; and

• A weakening of the state's liquidity position in 2009.

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