The agency Moody's confirmed the A-mx rating, with a stable outlook, for Nuevo León (NL). According to Moody's, the main credit challenges for the state are to prevent financial deficits from affecting its low liquidity position and to reduce short-term debt levels. The state has not contracted new long-term debt in 2024 due to the lack of legislative authorization. Instead, it has opted to refinance existing debt.
In September, Nuevo León presented an initiative to the congress for the fiscal year 2024 which, if approved, would allow it to contract long-term debt in the last quarter of the year. The rating agency Moody's highlighted that the confirmation of the A-.mx rating reflects the positive trend observed in the credit risk assessments from other agencies such as Fitch Ratings, SP Global, HR Ratings, and PC Verum.
Moody's Local Mexico projects that the state will report average financial deficits of 4.2% of total revenues in the coming years, which will be primarily financed with direct and indirect debt. Nuevo León has increased the contracting of short-term debt, which would represent around 10% of direct debt in 2024, a level that is intended to be reduced in coming years.
The A-mx rating with a stable outlook granted by Moody's highlights that Nuevo León's credit profile reflects a solid economic base, high own revenues, a high level of indebtedness, and low liquidity, but also positive operational balances and recurring financial deficits at the state level. The state has significantly increased its investments in capital expenditure and plans to maintain this level in the upcoming fiscal years.
