Moody's cuts Nuevo Leon

Moody's Investors Service said it downgraded the State of Nuevo Leon's Mexico national scale rating to A1.mx from Aa3.mx and global-scale local-currency rating to Ba1 from Baa3.

The outlook remains negative.

Moody's also said it downgraded Nuevo Leon's two enhanced loans to Aa1.mx from Aaa.mx and to Baa2 from Baa1, along with its MXN 2.42 billion bonds and MXN 250 municipal lending program from Banobras.

The agency also said it downgraded to Aa2.mx from Aa1.mx and Baa2 from Baa1 its MXN 1.6 billion from Banobras and MXN 1.5 billion from Bajio.

The downgrades reflect the recording of recurrent cash financing requirements and the increase in debt levels, Moody's said.

The outlook remains negative and reflects the risk that the measures being taken to redress financial performance will not be sufficient to address the state's financial challenges, the agency said.

While security problems have not explicitly affected Nuevo Leon's economy or the state's finances, it could have a negative impact in the medium term, Moody's added.

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