Moody's rates Naucalpan loan Baa2

Moody's Investors Service said it assigned a debt rating of Aa1.mx on the Mexico national scale and global scale local-currency debt rating of Baa2 to an upcoming enhanced loan of the Municipality of Naucalpan for 486 million in Mexican pesos from Banorte.

The loan is payable through a trust to which the municipality has pledged the flows and rights to a portion of its federal participation revenues, Moody's said.

The loan is denominated in Mexican pesos with maturity of 20 years. The loan will pay an interest rate composed of the 28-day Mexican Interbank Interest Rate plus a spread of 175 basis points. The upcoming loan is being contracted to refinance an existing loan at a lower cost, the agency said.

The ratings reflect the underlying creditworthiness of the municipality, supported by legal and credit enhancements embedded in the loan, including its validity of the legal authorization of the transaction and a 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, Moody's said.

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