S&P downgrades BDMG

S&P said it lowered the global scale rating on Banco de Desenvolvimento de Minas Gerais SA (BDMG) to B- from BB-.

The agency also said it lowered the national scale rating on the bank to brB- from brA.

The outlook is negative.

The downgrades follow similar rating actions on the state of Minas Gerais, which owns 89.8% of the bank directly and 10.2% indirectly through Companhia de Desenvolvimento Economico de Minas Gerais and other state-owned companies, S&P said.

The downgrades reflect the bank’s poor financial-management planning stemming from delays in payments to suppliers and of public-sector employee salaries, the agency said.

This has raised questions over the state's capacity and willingness to make full and timely payments on its financial obligations due in the next 12 months, S&P said.

Despite the efforts to increase tax rates, strengthen tax collection and tighten spending control, Minas Gerais has been struggling to stabilize its finances and has declared financial emergency Dec. 5, signaling less predictable financial management and overall poor financial policies, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.