Fitch affirms Sao Paulo

Fitch Ratings said it affirmed Sao Paulo's foreign- and local-currency long-term ratings at BBB and foreign- and local-currency short-term ratings at F2 with a stable outlook.

The affirmation considers the issuer's solid economy and sound budgetary performance with adequate flexibility along the economic cycles, according to the agency.

The ratings also incorporate the high debt burden and the financial flexibility provided by the debt renegotiation agreement with the federal government in 1997, which allows for the capitalization of interest payments owed to the federal government, the agency noted.

Sao Paulo debt levels remain among the highest in Brazil despite the relief observed since the restructured plan, the agency said.

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