Moody's gives Veracruz loan Ba1/A1.mx

Moody's de Mexico said it assigned debt ratings of A1.mx on the Mexico national scale and Ba1 on the global scale, local currency to a Ps. 1.3 billion enhanced loan of the State of Veracruz from Multiva.

Moody's said the Ba1/A1.mx ratings assigned to the loan reflect the underlying creditworthiness of the State of Veracruz (Ba3/A3.mx, stable outlook), supported by the following legal and credit enhancements embedded in the loan:

• Validity of the legal authorization of the transaction, which authorizes the trust to be used as a mechanism for debt service payment;

• Strong trust structure based on an irrevocable notification to the federal treasury regarding the transfer of rights and flows of participation revenues to the trustee;

• Estimated cash flows generate moderate debt service coverage ratios. Under a Moody's base case scenario, affected cash flows to the trust are projected to provide 2.0x debt service coverage at the lowest point over the life of the loan. Under a stress case scenario, estimated cash flows are projected to provide 1.6x debt service coverage for the loan, at the lowest point; and

• Solid level of reserves within the trust that represent 3x debt service coverage under a stress case scenario and provide enough cushion against payment delays.

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