Moody's rates Tabasco loan Baa1

Moody's Investors Service said it assigned a Baa1 global scale local currency rating and Aaa.mx Mexico national scale rating to the Mexican State of Tabasco's Ps. 449.9 million ten-year loan established under a loan agreement with Banco Santander with JP Morgan as trustee. Principal and interest on the loan will be paid monthly, with a variable interest rate capped at 15% for the first five years and with principal payments increasing 1% per month.

The outlook is stable.

Proceeds were used to refinance all of the state's direct debt.

To pay the loan, the state pledged to a payment trust the rights to a portion of its federal participation revenues. The agency said the designated amount is expected to result in debt service coverage that is adequate to meet debt service even under severe stress scenarios. The trust will maintain a reserve fund for the loan equal to Ps. 18 million, funded at the outset from loan proceeds.

The rating takes into account the state's adequate credit position and the enhancement provided by the trust structure and related legal documents, Moody's said.

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