S&P affirms Querétaro Arteaga

Standard & Poor's said it confirmed its AA-(mx) national-scale rating on the State of Querétaro Arteaga, United Mexican States.

The outlook is stable.

S&P said that the rating on Querétaro is supported by a solid economic base, which has continued to attract foreign direct investment over the last several years and resulted in gross state produce per capita above the national average, a sound financial performance, reflected in operating balances that have averaged 14.8% or operating revenue over the last three years and solid levels of capital expenditure as a percent of total expenditure, averaging 14.5% over the last three years and professional management, which has maintained a history of updated external audits.

The rating is constrained by an unfunded pension system, which will require sustainable reform over the long term and potential financial support to the water entity, Comisión Estatal de Agua de Querétaro (BBB+(mx)/positive), which could become an additional burden on the state's finances because it cannot afford to self-fund important infrastructure projects, the agency noted.

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