Moody’s downgrades Nogales

Moody's Investors Service said it downgraded the ratings of the municipality of Nogales to B3/B1.mx from B2/Ba1.mx.

The outlook remains negative.

The downgrade was prompted by the continuous and sharp deterioration of the municipality’s gross operating balance and ongoing poor liquidity, Moody’s said.

Its budget is structurally unbalanced as shown by the compound annual growth rate of 1% for operating revenues between 2011 and 2015, which is substantially lower than the rate of 6% for operating expenditures over the same period, the agency explained.

This continued poor performance was despite an increase in own-source revenues of 3% in 2015, a reversal of the downward trend recorded between 2011 and 2014, Moody’s added.

The negative outlook reflects the assumed continued pressure on the municipality's finances in the near term, the agency said.

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