MEXICO CITY, Nov. 13, 2012
/PRNewswire/ -- HR Ratings de Mexico, S.A. de C.V. ("HR Ratings") has
assigned a long-term rating of HR A- (G) to the sovereign debt of
Mexico, with a stable outlook.
This includes all currency denominations, including the peso, UDIs
and foreign currency. For short-term debt the assigned rating is
HR2 (G).
The rating is based on Mexico's
prudent fiscal policy, which has endured through at least three
presidential administrations and various political parties,
suggesting that a broad consensus for such policies exists. These
policies have emphasized limited budget deficits, the result of
which is that current debt levels are manageable. Additionally,
Mexico's current account deficit
has in recent years been small, increasing confidence in the credit
quality of Mexican sovereign debt. Most significantly, economic
performance and fiscal policy during the severe 2009 recession and
its aftermath demonstrates Mexico's ability to maintain discipline under
the most difficult of economic circumstances.
Commenting on this rating, Alberto
Ramos, CEO of HR Ratings said: "We are pleased to be issuing
a rating of Mexican sovereign debt as our first sovereign rating.
Our ratings philosophy is to provide dynamic, forward-looking
analysis. Seeking to provide investors with maximum transparency,
we are meticulous in our analysis of both the positive and negative
factors that affect our ratings."
Felix Boni, Chief Credit Officer
of HR Ratings, said: "We use IMF metrics that reveal the relative
strengths of a country's economic performance against other
sovereign groups, classified according to various economic and
regional characteristics, which enables us to be more precise in
our analysis."
The HR A- (G) rating assigned indicates that Mexico provides acceptable security to service
its debt obligations with a low credit risk. The "-" sign that
accompanies the long-term debt rating implies a relative weakness
within each rating scale, while the short-term HR2 (G) assigned
rating means it offers an acceptable capacity for timely payment of
short-term debt obligations and maintains a higher credit risk
compared with higher sovereign credit rating.
HR Ratings' Mexican sovereign debt rating included the
following additional analyses and conclusions:
- HR Ratings compared Mexico
with other sovereigns on a variety of relevant metrics, an analysis
that supports the assigned ratings, especially versus large
economies which generally have higher credit ratings even with
poorer credit quality fundamentals.
- An analysis forecasts an "on-Budget" financial deficit rising
to 3.06% of GDP in 2019 with the debt reaching 41.7%. This change
(from 2.5% and 31.7% for the last twelve months through
June 2012 and as of 2019,
respectively) is fully consistent with the rating.
- Cautious long-term view with some additional upside risk to our
forecast assumptions. Although Mexico's inflation remains above targeted
levels, significant progress has been made in stabilizing it,
especially at the core level, thus substantially reducing the risk
of an increase from current levels. Furthermore, the current rate
at above 4% appears to be related to transitory factors.
Downward rating pressure could result from one of the
following issues:
- A slowing in long-term growth prospects for the United States (U.S.), upon which
Mexico is strongly dependent. This
is despite some recent degree of diversification in Mexican trade
patterns.
- Risk that past policies will change given that a new
administration from a different party is taking office in December.
One possible result of this could be the creation of expansive new
entitlement programs in health and pensions. HR Ratings assumes
that a prudent fiscal policy will continue. However, forecasts do
assume that economic and political pressures will produce deficits
that will gradually lead to rising debt to GDP ratios.
- Deficiencies in public security. Although crime has likely had
an impact on economic growth in Mexico, the extent of this impact is difficult
to determine, especially in the context of strong recent
performance. HR Ratings does not assume any forthcoming change in
this regard.
An overview of the methodology for HR Ratings, including this
rating, is the HR Ratings de Mexico, S.A. de C.V. Ratings Scale. Please see
the HR Ratings Scale at:
www.hrratings.com/es/metodologia.aspx
About HR Ratings
HR Ratings de Mexico, S.A. de C.V. is a leading credit
rating agency, authorized by Mexico's National Banking and Securities
Commission (CNBV) and is the first Latin-American rating agency and
only the tenth company worldwide that currently has the
registration by the U.S. Securities and Exchange Commission (SEC)
as a Nationally Recognized Statistical Rating Organization
("NRSRO") for issuers of government securities.
HR Ratings provides credit ratings for a range of debt
securities and institutions in Mexico including governmental entities,
corporates, financial institutions and infrastructure with a value
totaling approximately $30 billion
dollars. Based in Mexico
City, the Firm has the on-the-ground resources and expertise
to provide unparalleled insights into the credit risks of market
participants. For more information, please visit: www.hrratings.com
For further information, please contact:
MEXICO
Mario
Maraboto
+ 52 (55)
5062.8250
mmaraboto@zimat.com.mx
|
U.S.A.
Liz Cohen
/ Jason Marshall
(212)
445-8044 / 8042
liz.cohen@webershandwick.com
jmarshall@webershandwick.com
|
Contacts
|
|
Felix Boni
|
Alfonso
Sales
|
Chief
Credit Officer, HR Ratings
|
Analist,
HR Ratings
|
E-mail:
felix.boni@hrratings.com
|
E-mail:
alfonso.sales@hrratings.com
|
|
|
Jorge
Gonzalez
|
|
Executive
Director Investor Relations, HR Ratings
|
|
E-mail:
jorge.gonzales@hrratings.com
|
|
|
|
C+ (52-55)
1500 3130
|
|
HR Ratings de Mexico,
S.A. de C.V. (HR Ratings) is a securities rating firm authorized by
the Comision Nacional Bancaria y de Valores (Mexican Banking and
Securities Commission), with over 100 years total experience
analyzing and rating the credit quality of companies and government
entities in Mexico, and also asset
management, or performance in terms of the corporate purpose of any
entity.
HR Ratings values are Validity, Quality, and
Service.
Paseo de los Tamarindos
400-A Piso 26, Col. Bosques de las Lomas, 05210, Mexico, D.F.
Tel 52(55)1500 3130
The rating granted by HR Ratings de Mexico, S. A. de C.V. in this press release is
supported by the analysis of stress and base scenarios. The Rating
is supported in the following methodology:
Sovereign Debt Methodology, September
2012
For additional information regarding HR RatingsĀ“ Methodology,
please consult the web page:
www.hrratings.com/es/metodologia.aspx
The following information is available on our website
www.hrratings.com: (i) The company's procedure for following up on
our ratings and the frequency of reviews; (ii) the criteria applied
by this rating firm to withdraw or suspend a rating, and (iii) the
structure and voting process of our Analysis Committee.
The ratings and/or opinions of HR Ratings de Mexico, S.A. de C.V. (HR Ratings) are opinions
on credit quality and/or asset management, or refer to performance
in terms of the corporate purpose for issuer companies and other
entities, and are based solely on the characteristics of the
entity, offering, and/or operation, independent of any business
activity between HR Ratings and the entity or issuer.
The ratings and/or opinions given or issued are not
recommendations to buy, sell, or hold any instrument, or to conduct
any type of business or operation, and may be subject to adjustment
at any time, according to the rating methodologies of HR Ratings
and the terms of Article 7, section II and/or III of the "General
provisions applicable to issuers of securities and other
participants in the securities market".
HR Ratings bases its ratings and/or opinions on information
gathered from sources considered to be accurate and reliable. HR
Ratings, however, does not guarantee or vouch for the accuracy,
precision, or completeness of any information and is not
responsible for any error or omission or for results obtained from
the use of this information. Most issuers of debt instruments rated
by HR Ratings have paid a credit rating fee based on the quantity
and type of offering. The goodwill of the security or the solvency
of the issuer, and, accordingly, the opinion given on the capacity
of an entity in terms of asset management and performance on its
corporate purpose may change, which may improve or lower the
rating, without this implying any liability for HR Ratings. HR
Ratings gives its ratings and/or opinions ethically and in
adherence of healthy market practices and in compliance with
applicable regulations, which can be found on the company website
at www.hrratings.com, where documents such as the Code of conduct,
methodologies or criteria for rating, and current ratings are
available.
The ratings and/or opinions HR Ratings issues include a credit
quality analysis for an entity, issuer, and/or offering, therefore
they do not necessarily reflect a statistical probability of
default on payment, this being understood as the impossibility or
lack of will of an entity or issuer to settle its contractual
obligations of payment, in which case creditors and/or holders are
forced to take measures to recover their investment, including
restructuring the debt due to the debtor facing a situation of
stress. However, to give our opinions on credit quality greater
validity, our methodology considers stress scenarios as a
complement to the analysis prepared on a base scenario.
SOURCE HR Ratings de Mexico,
S.A. de C.V.