This report does not constitute a rating action.
S&P Global Ratings assigns credit ratings to local and regional governments (LRGs) based on its qualitative and quantitative analysis of a range of financial, economic, managerial, and institutional factors. We articulate our analytical framework for rating LRGs around six major components resulting from our methodology:
- The institutional framework,
- Economy,
- Financial management,
- Budgetary performance,
- Liquidity, and
- Debt burden.
Our assessment of the institutional framework is an important component of the rating. The institutional and legislative environment in which an LRG operates provides important context to our evaluation of the LRG's individual credit profile.
Therefore, we combine our assessments of the institutional framework and the five other factors listed above to determine an indicative credit level for an individual LRG. We then adjust this level for certain overriding factors to provide the final rating on the respective LRG (see "Methodology For Rating Local And Regional Governments Outside Of The U.S.," published July 15, 2019).
Table 1
| Latin American local and regional government risk indicators (global scale) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| --Rating factor assessments-- | ||||||||||||||||
| Foreign currency ratings* | Institutional framework | Economy | Financial management | Budgetary performance | Liquidity | Debt burden | ||||||||||
| Mexico | ||||||||||||||||
|
Aguascalientes (State of) |
BBB/Stable/-- | 4 | 5 | 3 | 4 | 1 | 1 | |||||||||
|
Guanajuato (State of) |
BBB/Stable/-- | 4 | 5 | 3 | 2 | 1 | 1 | |||||||||
|
Queretaro (City of) |
BBB/Stable/-- | 5 | 4 | 3 | 1 | 1 | 1 | |||||||||
|
Queretaro Arteaga (State of) |
BBB/Stable/-- | 4 | 4 | 3 | 3 | 1 | 1 | |||||||||
| Brazil | ||||||||||||||||
|
Alagoas (State of) |
BB-/Negative/-- | 5 | 5 | 3 | 4 | 4 | 3 | |||||||||
|
Minas Gerais (State of) |
CCC+/Stable/-- | 5 | 5 | 5 | 5 | 5 | 4 | |||||||||
|
Niteroi (City of) |
BB/Stable/-- | 5 | 4 | 3 | 3 | 3 | 1 | |||||||||
|
Santa Catarina (State of) |
BB-/Stable/-- | 5 | 4 | 4 | 2 | 3 | 2 | |||||||||
| Argentina | ||||||||||||||||
|
Buenos Aires (City of) |
CCC/Stable/-- | 6 | 4 | 3 | 2 | 2 | 2 | |||||||||
|
Buenos Aires (Province of) |
CCC/Stable/-- | 6 | 5 | 5 | 5 | 5 | 3 | |||||||||
|
Entre Rios (Province of) |
CCC/Negative/-- | 6 | 5 | 5 | 5 | 5 | 2 | |||||||||
|
Jujuy (Province of) |
CCC/Stable/-- | 6 | 5 | 5 | 4 | 5 | 3 | |||||||||
|
La Rioja (Province of) |
SD | 6 | 5 | 5 | 4 | 5 | 3 | |||||||||
|
Mendoza (Province of) |
CCC/Stable/-- | 6 | 5 | 5 | 3 | 4 | 2 | |||||||||
|
Neuquen (Province of) |
CCC/Stable/-- | 6 | 5 | 5 | 4 | 5 | 2 | |||||||||
|
Rio Negro (Province of) |
CCC/Stable/-- | 6 | 5 | 5 | 5 | 5 | 2 | |||||||||
|
Salta (Province of) |
CCC/Stable/-- | 6 | 5 | 5 | 4 | 5 | 2 | |||||||||
| *Issuer credit ratings as of Sept. 13, 2024. Note: Institutional framework assessment is based on a six-point scale where 1 is the strongest score and 6 the weakest, while the other factors are considered on a scale from 1 to 5, where 1 is the strongest score and 5 the weakest. | ||||||||||||||||
Table 2
| Latin American local and regional government financial and economic statistics (global scale) | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Local GDP (nominal) per capita (US$) | National GDP (nominal) per capita (US$) | --Operating balance (% of operating revenue)-- | --Balance after capital accounts (% of total revenue)-- | --Direct debt (% of operating revenue)-- | --Tax-supported debt (% of consolidated operating revenue)-- | --Interest (% of operating revenue)-- | ||||||||||||||||||||||
| Foreign currency ratings§ | 2023a | 2023a | 2023 | Five-year average | 2023 | Five-year average | 2023 | Five-year average | 2023 | Five-year average | 2023 | Five-year average | ||||||||||||||||
| Latin American median | 13,847.2 | 13,467.3 | 12.1 | 10.4 | 0.6 | 1.0 | 22.1 | 22.6 | 22.1 | 21.1 | 1.7 | 1.6 | ||||||||||||||||
| Mexico | ||||||||||||||||||||||||||||
|
Aguascalientes (State of) |
BBB/Stable/-- | 16,282.5 | 13,467.3 | 2.5 | 3.6 | (3.4) | (1.3) | 10.5 | 9.6 | 10.5 | 9.6 | 1.2 | 1.0 | |||||||||||||||
|
Guanajuato (State of) |
BBB/Stable/-- | 12,946.4 | 13,467.3 | 11.2 | 10.0 | 4.6 | 2.2 | 9.7 | 8.8 | 9.7 | 8.9 | 1.2 | 0.9 | |||||||||||||||
|
Queretaro (City of) |
BBB/Stable/-- | 22,205.3 | 13,467.3 | 31.5 | 30.3 | (4.3) | 0.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||
|
Queretaro Arteaga (State of)* |
BBB/Stable/-- | 17,949.7 | 13,467.3 | 11.5 | 12.6 | (1.8) | (1.1) | 3.0 | 2.7 | 3.0 | 2.7 | 0.0 | 0.2 | |||||||||||||||
| Brazil | ||||||||||||||||||||||||||||
|
Alagoas (State of) |
BB-/Negative/-- | 5,424.3 | 10,043.6 | 7.6 | 9.0 | (10.4) | (4.4) | 85.8 | 88.3 | 85.8 | 88.3 | 4.2 | 4.4 | |||||||||||||||
|
Minas Gerais (State of)* |
CCC+/Stable/-- | 8,863.0 | 10,043.6 | 8.1 | 5.6 | 2.1 | (0.6) | 179.2 | 177.7 | 179.2 | 177.7 | 1.7 | 3.0 | |||||||||||||||
|
Niteroi (City of)* |
BB/Stable/-- | 24,992.0 | 10,043.6 | 32.9 | 27.3 | 20.3 | 15.2 | 10.7 | 11.2 | 10.7 | 11.2 | 1.0 | 1.1 | |||||||||||||||
|
Santa Catarina (State of) |
BB-/Stable/-- | 13,774.5 | 10,043.6 | 13.2 | 12.9 | 6.2 | 2.6 | 51.7 | 48.8 | 51.7 | 48.8 | 2.6 | 2.4 | |||||||||||||||
| Argentina | ||||||||||||||||||||||||||||
|
Buenos Aires (City of) |
CCC/Stable/-- | 35,116.8 | 13,920.0 | 21.7 | 18.8 | 6.4 | 3.2 | 40.5 | 25.5 | 40.5 | 25.5 | 3.0 | 2.9 | |||||||||||||||
|
Buenos Aires (Province of) |
CCC/Stable/-- | 12,756.1 | 13,920.0 | 0.1 | 1.2 | (7.1) | (4.8) | 103.7 | 65.8 | 103.7 | 65.8 | 2.7 | 2.7 | |||||||||||||||
|
Entre Rios (Province of) |
CCC/Negative/-- | 9,370.0 | 13,920.0 | (0.6) | (0.6) | (6.1) | (3.9) | 50.3 | 34.3 | 50.3 | 34.3 | 1.5 | 1.7 | |||||||||||||||
|
Jujuy (Province of)* |
CCC/Stable/-- | 8,324.1 | 13,920.0 | 14.2 | 13.4 | (1.8) | (0.7) | 100.8 | 73.8 | 100.8 | 73.8 | 2.7 | 2.5 | |||||||||||||||
|
La Rioja (Province of) |
SD | 4,605.8 | 13,920.0 | 11.4 | 5.9 | (2.6) | (1.8) | 85.0 | 57.9 | 85.0 | 57.9 | 2.0 | 2.0 | |||||||||||||||
|
Mendoza (Province of) |
CCC/Stable/-- | 8,375.3 | 13,920.0 | 15.6 | 12.0 | 3.4 | 2.5 | 49.9 | 39.0 | 49.9 | 39.0 | 3.6 | 3.5 | |||||||||||||||
|
Neuquen (Province of) |
CCC/Stable/-- | 20,905.3 | 13,920.0 | 5.9 | 5.0 | 0.1 | (1.6) | 68.6 | 46.0 | 68.6 | 46.0 | 2.4 | 2.3 | |||||||||||||||
|
Rio Negro (Province of)* |
CCC/Stable/-- | 8,556.6 | 13,920.0 | (2.0) | 1.6 | (4.4) | (1.5) | 60.8 | 37.2 | 60.8 | 37.2 | 4.7 | 4.8 | |||||||||||||||
|
Salta (Province of) |
CCC/Stable/-- | 8,001.7 | 13,920.0 | 5.4 | 4.0 | 0.6 | 0.3 | 44.3 | 28.6 | 44.3 | 28.6 | 2.3 | 1.8 | |||||||||||||||
| The data and ratios above result in part from S&P Global Ratings' own calculations, drawing on national as well as international sources, reflecting S&P Global Ratings' independent view on the timeliness, coverage, accuracy, credibility, and usability of available information. The main sources are the financial statements and budgets, as provided by the issuer. Notes: Five-year averages cover 2022-2026 except where otherwise indicated. Data for 2023 refers to actuals whenever available, then estimates or base cases whenever available. *Average corresponds to 2022-2025. §Issuer credit ratings as of Sept. 13, 2024. a--Actual. | ||||||||||||||||||||||||||||
Table 3
| Latin American local and regional government risk indicators (national scale ratings) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| --Rating factor assessments-- | ||||||||||||||||
| National scale ratings* | Institutional framework | Economy | Financial management | Budgetary performance | Liquidity | Debt burden | ||||||||||
| Mexico | ||||||||||||||||
|
Cajeme (City of) |
mxA+/Positive/-- | 5 | 5 | 4 | 3 | 2 | 2 | |||||||||
|
General Escobedo (City of) |
mxBBB+/Stable/-- | 5 | 4 | 4 | 4 | 4 | 1 | |||||||||
|
Guadalupe, N. L. (City of) |
mxA-/Stable/-- | 5 | 4 | 4 | 3 | 4 | 1 | |||||||||
|
Guaymas (City of) |
mxA-/Stable/-- | 5 | 5 | 4 | 3 | 2 | 2 | |||||||||
|
Leon (City of) |
mxAA+/Stable/-- | 5 | 5 | 3 | 3 | 2 | 1 | |||||||||
|
Los Cabos (City of) |
mxB+/Stable/-- | 5 | 5 | 5 | 4 | 5 | 2 | |||||||||
|
Mazatlan (City of) |
mxA+/Negative/-- | 5 | 5 | 4 | 3 | 3 | 2 | |||||||||
|
Merida (City of) |
mxAA+/Stable/-- | 5 | 4 | 3 | 3 | 2 | 1 | |||||||||
|
Morelia (City of) |
mxAA-/Negative/-- | 5 | 5 | 4 | 3 | 3 | 1 | |||||||||
|
Navojoa (City of) |
mxBB+/Stable/-- | 5 | 5 | 5 | 4 | 4 | 1 | |||||||||
|
Puebla (City of) |
mxAA+/Stable/-- | 5 | 5 | 3 | 2 | 1 | 1 | |||||||||
|
Queretaro (City of) |
mxAAA/Stable/-- | 5 | 4 | 3 | 1 | 1 | 1 | |||||||||
|
Saltillo (City of) |
mxAA/Stable/-- | 5 | 5 | 3 | 2 | 2 | 1 | |||||||||
|
San Nicolas de los Garza (City of) |
mxAA-/Positive/-- | 5 | 3 | 3 | 4 | 2 | 2 | |||||||||
|
Tijuana (City of) |
mxAA-/Positive/-- | 5 | 4 | 4 | 3 | 2 | 1 | |||||||||
|
Torreon (City of) |
mxAA/Stable/-- | 5 | 5 | 3 | 3 | 2 | 1 | |||||||||
|
Aguascalientes (State of) |
mxAA+/Stable/-- | 4 | 5 | 3 | 4 | 1 | 1 | |||||||||
|
Campeche (State of) |
mxA+/Stable/-- | 4 | 5 | 4 | 4 | 2 | 1 | |||||||||
|
Chiapas (State of) |
mxA+/Stable/-- | 4 | 5 | 4 | 4 | 3 | 1 | |||||||||
|
Durango (State of) |
mxBB+/Stable/-- | 4 | 5 | 4 | 5 | 4 | 3 | |||||||||
|
Guanajuato (State of) |
mxAAA/Stable/-- | 4 | 5 | 3 | 2 | 1 | 1 | |||||||||
|
Guerrero (State of) |
mxBBB/Stable/-- | 4 | 5 | 4 | 5 | 4 | 2 | |||||||||
|
Hidalgo (State of) |
mxA+/Stable/-- | 4 | 5 | 4 | 4 | 3 | 1 | |||||||||
|
Nuevo Leon (State of) |
mxA/Positive/-- | 4 | 3 | 3 | 4 | 4 | 4 | |||||||||
|
Oaxaca (State of) |
mxA/Stable/-- | 4 | 5 | 4 | 4 | 4 | 1 | |||||||||
|
Queretaro Arteaga (State of) |
mxAAA/Stable/-- | 4 | 4 | 3 | 3 | 1 | 1 | |||||||||
|
Quintana Roo (State of) |
mxA+/Positive/-- | 4 | 4 | 4 | 3 | 2 | 3 | |||||||||
|
Sinaloa (State of) |
mxA/Stable/-- | 4 | 5 | 4 | 4 | 4 | 1 | |||||||||
| Brazil | ||||||||||||||||
|
Niteroi (City of) |
brAAA/Stable/-- | 5 | 4 | 3 | 3 | 3 | 1 | |||||||||
|
Alagoas (State of) |
brAA+/Negative/-- | 5 | 5 | 3 | 4 | 4 | 3 | |||||||||
|
Minas Gerais (State of) |
brBB/Stable/-- | 5 | 5 | 5 | 5 | 5 | 4 | |||||||||
|
Paraiba (State of) |
brAAA/Stable/-- | 5 | 5 | 4 | 3 | 3 | 1 | |||||||||
|
Santa Catarina (State of) |
brAA+/Stable/-- | 5 | 4 | 4 | 2 | 3 | 2 | |||||||||
| Argentina | ||||||||||||||||
|
Buenos Aires (City of) |
raB+/Stable/-- | 6 | 4 | 3 | 2 | 2 | 2 | |||||||||
|
Buenos Aires (Province of) |
raB/Stable/-- | 6 | 5 | 5 | 5 | 5 | 3 | |||||||||
| *Issuer credit ratings as of Sept. 13, 2024. Note: Institutional framework assessment is based on a six-point scale where 1 is the strongest score and 6 the weakest, while the other factors are considered on a scale from 1 to 5, where 1 is the strongest score and 5 the weakest. | ||||||||||||||||
Table 4
| Latin American local and regional government financial and economic statistics (national scale ratings) | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Local GDP (nominal) per capita (US$) | National GDP (nominal) per capita (US$) | --Operating balance (% of operating revenue)-- | --Balance after capital accounts (% of total revenue)-- | --Direct debt (% of operating revenue)-- | --Tax-supported debt (% of consolidated operating revenue)-- | --Interest (% of operating revenue)-- | ||||||||||||||||||||||
| National scale ratings§ | 2023a | 2023a | 2023 | Five-year average | 2023 | Five-year average | 2023 | Five-year average | 2023 | Five-year average | 2023 | Five-year average | ||||||||||||||||
| Latin American median | 13,847.2 | 13,467.3 | 12.1 | 10.4 | 0.6 | 1.0 | 22.1 | 22.6 | 22.1 | 21.1 | 1.7 | 1.6 | ||||||||||||||||
| Mexico | ||||||||||||||||||||||||||||
|
Cajeme (City of) |
mxA+/Positive/-- | 14,036.3 | 13,467.3 | 11.3 | 9.8 | 1.6 | 1.3 | 40.6 | 34.7 | 40.6 | 34.7 | 4.0 | 3.2 | |||||||||||||||
|
General Escobedo (City of)* |
mxBBB+/Stable/-- | 22,656.7 | 13,467.3 | 31.6 | 31.1 | 8.7 | 7.3 | 14.3 | 24.6 | 14.3 | 24.6 | 1.6 | 1.7 | |||||||||||||||
|
Guadalupe, N. L. (City of) |
mxA-/Stable/-- | 12,405.2 | 13,467.3 | 20.3 | 19.4 | 5.2 | 4.7 | 25.0 | 22.5 | 25.0 | 22.5 | 1.8 | 1.6 | |||||||||||||||
|
Guaymas (City of) |
mxA-/Stable/-- | 13,579.3 | 13,467.3 | 13.4 | 13.3 | 0.6 | 0.2 | 33.2 | 30.9 | 33.2 | 30.9 | 4.9 | 3.9 | |||||||||||||||
|
Leon (City of)* |
mxAA+/Stable/-- | 8,254.5 | 13,467.3 | 26.3 | 23.2 | 7.6 | 1.9 | 10.9 | 12.9 | 10.9 | 12.9 | 1.2 | 1.3 | |||||||||||||||
|
Los Cabos (City of) |
mxB+/Stable/-- | 20,242.0 | 13,467.3 | 14.4 | 8.6 | 4.9 | 1.0 | 6.6 | 6.6 | 6.6 | 6.6 | 1.3 | 0.7 | |||||||||||||||
|
Mazatlan (City of) |
mxA+/Negative/-- | 19,314.5 | 13,467.3 | 14.8 | 11.2 | 4.8 | 2.3 | 6.2 | 4.6 | 6.2 | 4.6 | 0.6 | 0.4 | |||||||||||||||
|
Merida (City of) |
mxAA+/Stable/-- | 17,851.6 | 13,467.3 | 13.0 | 10.9 | (3) | (0.4) | 5.5 | 4.4 | 5.5 | 4.4 | 0.6 | 0.4 | |||||||||||||||
|
Morelia (City of) |
mxAA-/Negative/-- | 16,892.7 | 13,467.3 | 4.7 | 15.2 | (25.4) | (0.8) | 5.7 | 2.0 | 5.7 | 2.0 | 0.6 | 0.3 | |||||||||||||||
|
Navojoa (City of) |
mxBB+/Stable/-- | 15,141.4 | 13,467.3 | 12.7 | 9.9 | (1.7) | (1.9) | 19.9 | 19.6 | 19.9 | 19.6 | 3.0 | 2.2 | |||||||||||||||
|
Puebla (City of) |
mxAA+/Stable/-- | 10,131.9 | 13,467.3 | 17.1 | 15.9 | (7.6) | (1.0) | 0.9 | 0.6 | 0.9 | 0.6 | 0.2 | 0.0 | |||||||||||||||
|
Queretaro (City of) |
mxAAA/Stable/-- | 22,205.3 | 13,467.3 | 31.5 | 30.3 | (4.3) | 0.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||
|
Saltillo (City of)* |
mxAA/Stable/-- | 22,006.9 | 13,467.3 | 20.7 | 20.5 | 3.1 | 3.5 | 0.0 | 0.0 | 5.9 | 5.7 | 0.0 | 0.0 | |||||||||||||||
|
San Nicolas de los Garza (City of)* |
mxAA-/Positive/-- | 31,364.8 | 13,467.3 | 17.1 | 12.7 | (2.1) | 5.0 | 36.9 | 34.2 | 36.9 | 34.2 | 3.5 | 3.4 | |||||||||||||||
|
Tijuana (City of) |
mxAA-/Positive/-- | 19,567.4 | 13,467.3 | 26.6 | 21.7 | 12.4 | 10.7 | 18.4 | 8.2 | 18.4 | 8.2 | 2.2 | 0.9 | |||||||||||||||
|
Torreon (City of)* |
mxAA/Stable/-- | 18,772.1 | 13,467.3 | 18.7 | 18.2 | 4.8 | 5.3 | 24.3 | 22.7 | 24.3 | 22.7 | 0.0 | 0.0 | |||||||||||||||
|
Aguascalientes (State of) |
mxAA+/Stable/-- | 16,282.5 | 13,467.3 | 2.5 | 3.6 | (3.4) | (1.3) | 10.5 | 9.6 | 10.5 | 9.6 | 1.2 | 1.0 | |||||||||||||||
|
Campeche (State of) |
mxA+/Stable/-- | 14,797.3 | 13,467.3 | 17.5 | 11.9 | 9.1 | 3.5 | 7.8 | 7.6 | 7.8 | 7.6 | 1.1 | 0.9 | |||||||||||||||
|
Chiapas (State of)* |
mxA+/Stable/-- | 4,821.5 | 13,467.3 | 8.2 | 7.5 | (0.0) | 1.2 | 17.5 | 17.5 | 17.5 | 17.5 | 1.4 | 1.5 | |||||||||||||||
|
Durango (State of)* |
mxBB+/Stable/-- | 12,137.1 | 13,467.3 | 3.2 | 0.1 | 1.4 | (1.9) | 24.3 | 27.8 | 24.3 | 27.8 | 3.2 | 2.9 | |||||||||||||||
|
Guanajuato (State of) |
mxAAA/Stable/-- | 12,946.4 | 13,467.3 | 11.2 | 10.0 | 4.6 | 2.2 | 9.7 | 8.8 | 9.7 | 8.9 | 1.2 | 0.9 | |||||||||||||||
|
Guerrero (State of) |
mxBBB/Stable/-- | 6,218.1 | 13,467.3 | 0.9 | 1.6 | (1.7) | (0.7) | 6.3 | 5.0 | 6.3 | 5.0 | 0.4 | 0.5 | |||||||||||||||
|
Hidalgo (State of) |
mxA+/Stable/-- | 9,910.4 | 13,467.3 | 8.7 | 7.0 | (2.3) | (0.3) | 5.5 | 5.0 | 5.5 | 5.0 | 0.7 | 0.6 | |||||||||||||||
|
Nuevo Leon (State of) |
mxA/Positive/-- | 23,897.2 | 13,467.3 | 7.2 | 7.1 | (5.3) | (5.1) | 52.1 | 56.1 | 52.6 | 56.6 | 6.2 | 5.0 | |||||||||||||||
|
Oaxaca (State of)* |
mxA/Stable/-- | 7,580.9 | 13,467.3 | 5.8 | 5.0 | 4.6 | 1.3 | 18.2 | 17.2 | 18.2 | 17.2 | 2.5 | 1.9 | |||||||||||||||
|
Queretaro Arteaga (State of)* |
mxAAA/Stable/-- | 17,949.7 | 13,467.3 | 11.5 | 12.6 | (1.8) | (1.1) | 3.0 | 2.7 | 3.0 | 2.7 | 0.0 | 0.2 | |||||||||||||||
|
Quintana Roo (State of) |
mxA+/Positive/-- | 14,618.3 | 13,467.3 | 11.1 | 6.0 | 9.3 | 1.6 | 42.8 | 43.0 | 42.8 | 43.0 | 5.5 | 4.3 | |||||||||||||||
|
Sinaloa (State of) |
mxA/Stable/-- | 12,639.2 | 13,467.3 | 4.9 | 4.7 | 0.7 | 1.0 | 10.4 | 6.2 | 10.4 | 6.2 | 0.8 | 0.7 | |||||||||||||||
| Brazil | ||||||||||||||||||||||||||||
|
Niteroi (City of)* |
brAAA/Stable/-- | 24,992.0 | 10,043.6 | 32.9 | 26.1 | 20.3 | 16.4 | 10.7 | 10.7 | 10.7 | 10.7 | 1.0 | 0.9 | |||||||||||||||
|
Alagoas (State of) |
brAA+/Negative/-- | 5,424.3 | 10,043.6 | 7.6 | 9.0 | (10.4) | (4.4) | 85.8 | 88.3 | 85.8 | 88.3 | 4.2 | 4.4 | |||||||||||||||
|
Minas Gerais (State of)* |
brBB/Stable/-- | 8,863.0 | 10,043.6 | 8.1 | 2.1 | 2.1 | (2.9) | 179.2 | 180.6 | 179.2 | 180.6 | 1.7 | 3.8 | |||||||||||||||
|
Paraiba (State of) |
brAAA/Stable/-- | 4,538.7 | 10,043.6 | 15.9 | 16.2 | 5.1 | 4.4 | 39.8 | 36.1 | 39.9 | 36.2 | 0.9 | 0.9 | |||||||||||||||
|
Santa Catarina (State of) |
brAA+/Stable/-- | 13,774.5 | 10,043.6 | 13.2 | 12.9 | 6.2 | 2.6 | 51.7 | 48.8 | 51.7 | 48.8 | 2.6 | 2.4 | |||||||||||||||
| Argentina | ||||||||||||||||||||||||||||
|
Buenos Aires (City of) |
raB+/Stable/-- | 35,116.8 | 13,846.9 | 22.5 | 14.6 | 8.4 | 2.2 | 40.5 | 26.6 | 40.5 | 26.6 | 3.0 | 3.6 | |||||||||||||||
|
Buenos Aires (Province of) |
raB/Stable/-- | 12,756.1 | 13,846.9 | 0.1 | 1.2 | (7.1) | (4.8) | 103.7 | 65.8 | 103.7 | 65.8 | 2.7 | 2.7 | |||||||||||||||
| The data and ratios above result in part from S&P Global Ratings' own calculations, drawing on national as well as international sources, reflecting S&P Global Ratings' independent view on the timeliness, coverage, accuracy, credibility, and usability of available information. The main sources are the financial statements and budgets, as provided by the issuer. Notes: Five-year averages cover 2022-2026 except where otherwise indicated. Data for 2023 refers to actuals whenever available, then estimates or base cases whenever available. *Average corresponds to 2022-2025. §Issuer credit ratings as of Sept. 13, 2024. a--Actual. | ||||||||||||||||||||||||||||
LRG Characteristics By Country And Rating Category
We rate a total of 42 LRGs in Argentina, Brazil, and Mexico, and the majority of the ratings have stable outlooks. But the ratings themselves range from 'CCC' to 'BBB' given the differing macroeconomic backdrops and the individual LRGs' credit characteristics.
Debt-to-operating revenue ratios across Latin American LRGs should remain low relative to the ratios at global peers. But they could inch upward as these LRGs use up the savings accumulated from extraordinary support or strong rebounds in revenue following the pandemic.
Even though pressure on expenditures picked up in 2023 because of elevated inflation, we don't foresee widespread credit deterioration for LRGs in Mexico and Brazil over the next two years. Rather, there are some positive trends for several Mexican LRG ratings, with liquidity pressure easing and debt remaining low compared to operating revenue.
Last year, we raised the long-term sovereign rating on Brazil to 'BB' from 'BB-' following the approval of a significant overhaul of the tax system that could boost productivity over the longer term. This could eventually strengthen Brazil's still low GDP growth prospects and translate into some positive momentum for its rated LRGs.
That said, we don't currently expect the tax overhaul to generate significant revenue gains for Brazilian states or municipalities, in part because the complex reform aims to be revenue neutral, and productivity gains would take time to materialize.
The 'CCC' ratings on most of the provinces we rate in Argentina capture the nation's broader macroeconomic conditions. The administration of President Javier Milei has undertaken comprehensive reforms designed to stabilize the economy, reduce inflation, address fiscal imbalances, and set the stage for economic growth.
However, economic conditions in Argentina remain fragile; this includes the country's still weak international reserves position, which caps our transfer and convertibility assessment and our credit ratings. At the same time, the sovereign--as well as the LRGs--lacks access to global capital markets.
Mexico
We rate 28 Mexican LRGs, five of which have ratings with a positive outlook. On balance, we expect solid fiscal performance, with a five-year average operating surplus of 11.2% for 2022-2026 and a small surplus after capital accounts of 1.2%.
As has historically been the case, we believe most Mexican LRGs that we rate will maintain balanced fiscal results overall, will tend to avoid borrowing, and will instead finance operating and capital expenditures with cash or forgo capital spending.
In 2023, weaker-than-budgeted performance of shared tax revenues ("participaciones federales") led the central government to coordinate the leveraging of an LRG stabilization fund (which had been done previously in 2020 and 2009) to finance the shortfall in transfers to local governments. Since transfers average roughly 90% of state revenue and 65% of municipal revenue, this was key to ensuring that LRGs' revenue would align with their budgetary planning.
Pending a replenishment of the fund, its depletion limits the scope of any such operations in the future and constrains future fiscal flexibility in the face of a subsequent shortfall in federal transfers.
Having said that, more realistic budgetary forecasts and economic assumptions in 2024 better capture this year's somewhat weaker economic growth prospects across Mexico. Going forward, pressure on revenue growth would challenge local governments to maintain budgetary balance without further cuts to spending. To the extent that LRGs are already limited in terms of both revenue and expenditure flexibility, this could put a cap on the upward rating momentum observed over the last two years.
Financial conditions remained relatively stable in 2023 and 2024, with Mexican LRGs' liquidity being stronger, on average, than during the prior three years. This has facilitated smoother changes in local financial administrations (associated with elections) over the past two years; Mexican LRGs are obliged to pay down all short-term debt in the three months before any change in administration. In the past, squeezed liquidity levels around political transitions generated credit vulnerabilities.
We project a median debt burden of less than 20% of operating revenue (which is low by international standards) given the political emphasis on low public debt and generally weak capital execution--all despite high infrastructure needs.
We rate four Mexican LRGs on the global scale:
- State of Aguascalientes,
- State of Guanajuato,
- State of Queretaro, and
- City of Queretaro.
All four have long-term ratings of 'BBB' with a stable outlook, the same as the long-term foreign currency sovereign rating and outlook.
We rate all other rated Mexican states and municipalities on the Mexican national scale only. Mexican national scale ratings of 'mxAA+' and higher typically correspond to the 'BBB' rating category on the global scale (see "National And Regional Scale Credit Ratings Methodology," published June 8, 2023). Mexican national scale ratings between 'mxBBB' and 'mxAA' typically correspond to the 'BB' category.
'BBB' category entities and peers rated on the national scale typically have stronger financial management and stronger liquidity than lower-rated peers. Most Mexican LRGs are constrained by limited economic growth prospects, which follow from the sovereign. Only a handful of entities in the country's north and center regions appear to be benefiting from nearshoring trends, although we haven't seen a significant surge in foreign direct investment across states. Furthermore, entities are affected by relatively weak socioeconomic indicators, with high poverty, informality, and insecurity.
Despite historically balanced fiscal accounts, on average, and low debt levels, 100% of LRG debt is and must be denominated in local currency by law (established by the Mexican Constitution). All subnational governments in Mexico operate within a highly centralized form of fiscal federalism that limits their influence on policies affecting their finances and control over revenue. At the same time, political turnover across administrations limits administrative and policy continuity, as well as the reasonable horizon for financial planning and execution.
We consider Mexican states to be operating in an institutional framework that is evolving and unbalanced (see "Mexican States Prioritize Low Debt Levels And Balanced Fiscal Results Over Capital Spending," published July 15, 2024). Meanwhile, Mexican municipalities operate in a somewhat weaker institutional framework that is volatile and unbalanced (see "Low Infrastructure Spending Despite Generally Balanced Fiscal Results And Low Debt Levels Among Mexican Municipalities," published July 15, 2024).
A key difference in the framework for states versus municipalities is that fiscal transparency is weaker among Mexican municipalities. In addition, state governments can easily pass on their financial woes to municipalities by delaying transfers to them.
Argentina
Most of the nine rated LRGs in Argentina have a 'CCC' long-term foreign currency rating with a stable outlook. The exceptions are the Province of Entre Rios (CCC/Negative/--) and the Province of La Rioja (SD); the latter defaulted on its green bond in March 2024 and is currently seeking a new restructuring agreement with bondholders.
Our ratings for the country's LRGs are capped by the 'CCC' transfer and convertibility assessment on Argentina--an assessment that is in the context of the sovereign's still low levels of international reserves, its inability to tap the global markets, and its fragile macroeconomic conditions. Our stand-alone credit profiles for the LRGs, which range from 'ccc' to 'bb-', reflect variability in the credit profiles.
For Argentine LRGs, we expect a five-year average operating balance of 6.8% for 2022-2026 and a deficit after capital accounts of 0.9% of total revenue. These averages do mask variable performance during the period amid pronounced macroeconomic volatility, as well as differences across provinces. However, in general, they indicate that Argentine LRGs have had to adjust their fiscal performance vis-à-vis the sovereign given their lesser funding ability.
Amid a sharp decrease in revenue stemming from the economic contraction and the national government's fiscal adjustment, several provinces have been adjusting their budgets in 2024. Operating spending, particularly payroll, has been a source of adjustment in real terms in the context of very high inflation (estimated to be over 200% for 2024). Already low capex levels were also cut to a minimum.
With the exception of La Rioja, Argentina's provinces have all met their debt service payments thus far in 2024. The remaining payments on international bonds from September through December amount to roughly US$795 million (US$350 million of which is from the Province of Buenos Aires, which made the payment due on Sept. 1). Notably, these payments are smoother following the debt restructurings in 2020-2021.
While there were no widespread debt restructurings this year, we believe that economic recovery and access to the credit markets will be key for creditworthiness in the future, since provinces will likely seek to resume capital spending following the adjustment (while there could be pressures on operating spending, as well).
We project that Argentina's GDP will contract by 3.5% in 2024, although activity should start to recover in the second half, and LRGs should generally follow a similar trend.
Real GDP could grow 3.5% in both 2025 and 2026, depending on the success of the reform measures, but our projections are subject to high uncertainty. Reaching a new agreement with the IMF could help Argentina gain more access to external liquidity and sustain growth.
Argentine LRGs' debt stock is subject to volatility in the exchange rate and inflation dynamics. The median debt increased to 61% of operating revenue in 2023 from 36% in 2022, as the exchange rate virtually doubled toward the end of the year. A real exchange-rate appreciation and still tight financing conditions are why we assume the debt burden will moderate toward 30% of operating revenue by 2026. In this context, interest payments should remain generally low--at 2.55% of operating revenue, on average, and at 6.9% if we take total debt service next year.
Given the sovereign's still weak international reserves position and limited access to external credit markets, building cash buffers and maintaining their value in real terms are still key challenges for Argentine LRGs.
We view the institutional framework in which Argentine municipalities and provinces operate as very volatile and underfunded. Economic instability and major economic policy shifts make long-term financial planning extremely difficult, at both the federal and local levels. The relationship between LRGs and the federal government, including via the federal fiscal framework, is characterized by frequent reforms and a short track record of compliance with fiscal discipline laws.
Brazil
We rate five LRGs in Brazil, and one has a rating with a negative outlook. Across the entities we rate, we project an average after-capital fiscal surplus of 3.2% of revenue in 2022-2026, a decline from the 2023 average of 4.7%. We expect that debt to revenue will remain stable at about 70% of operating revenue given limited new borrowing.
Brazilian states' fiscal performance remained balanced in the first half of 2024, reflecting strong revenue performance and moderate payroll growth. Their revenue structure is particularly sensitive to economic activity in nominal terms, either from local tax collection or via transfers from the central government. Stronger-than-expected consumption, coupled with high inflation, bolstered LRGs' revenue--both revenue from own-source taxation as well as revenue collected by the central government and passed on in the form of transfers over the last two years.
Moreover, at the beginning of 2024, various states raised their ICMS general rate tax to compensate for the reduction in fuels, transport, communication, and electricity essential services taxation mandated by the central government in June 2022.
When fully implemented, the tax reform that was approved in December 2023 will significantly simplify the country's tax system, and it could have positive effects on growth. The reform consolidates five indirect taxes, including two subnational taxes, into a dual value-added tax system, and it harmonizes consumption tax codes across the country.
Since the reform won't be fully implemented until 2033, it's likely that productivity gains will only be realized later in the decade. The long implementation period as well as the intrastate compensation mechanisms should limit revenue losses to individual LRGs.
Brazilian states and municipalities operate in an institutional framework that we consider volatile and unbalanced (see "Brazilian States And Municipalities' Fiscal Flexibility Will Remain Limited Despite Reforms," published Nov. 7, 2023). Although the laws governing the federal fiscal system are well-grounded and relatively stable, with transparent disclosure, the system's rigidity and complexity have left LRGs unable to address structural imbalances in their budgets. We believe that lack of progress on this front will translate into structurally weak budgetary performance, low capital expenditure, and higher debt in the long term.
We rate four Brazilian LRGs on the global scale:
- City of Niteroi (BB/Stable/--; national scale: brAAA/Stable/--),
- State of Alagoas (BB-/Negative/--; national scale: brAA+/Negative/--),
- State of Santa Catarina (BB-/Stable/--; national scale: brAA+/Stable/--), and
- State of Minas Gerais (CCC+/Stable/--; national scale: brBB/Stable/--).
We rate the State of Paraiba at brAAA/Stable/-- on the Brazilian national scale. A rating of 'brAA+' could correspond to a global scale rating of either 'BB-' or 'BB' under our "National And Regional Scale Credit Ratings Methodology."
Related Research
- Institutional Framework Assessments For Local And Regional Governments Outside Of The U.S., July 31, 2024
- Global LRGs Rating History List, June 17, 2024
- China Local Governments: The Slow Road To Stabilization, June 13, 2024
- U.K. Local Authorities Are Bending, But Adapting, June 6, 2024
- Mexico's New Administration Faces Old Challenges, June 3, 2024
- Your Three Minutes In Argentine Provinces: Debt Restructurings Will Likely Be Case By Case, April 30, 2024
- Your Three Minutes In Spanish Regional Finance: Higher Expenditure May Limit Deleveraging, April 24, 2024
- China LRGs: Recouping Revenue Is Key To Fiscal Sustainability, March 26, 2024
- Brazil's Fiscal Recovery Programs Support Local And Regional Governments' Finances Amid Budget Rigidities, March 14, 2024
- Paris' Lean Olympics Are Unlikely To Blow Any Budgets, March 11, 2024
- Subnational Debt 2024: Fiscal Policy Differences Influence Borrowing In Developed Markets, March 4, 2024
- Subnational Debt 2024: Focus On Debt Sustainability, Feb. 29, 2024
- Subnational Debt 2024: Canadian Local And Regional Governments Are Running Fast To Stay In Place, Feb. 29, 2024
- Subnational Debt 2024: Chinese Governments Reach Their Limits; Other Emerging Markets Taper Borrowing, Feb. 29, 2024
- Subnational Debt 2024: Infrastructure Spending Succumbs To Economic Slowdown, Feb. 29, 2024
- Global Ratings List: International Public Finance Entities January 2024, Jan. 18, 2024
| Primary Credit Analyst: | Lisa M Schineller, PhD, New York + 1 (212) 438 7352; lisa.schineller@spglobal.com |
| Secondary Contacts: | Manuel Orozco, Mexico City +52 55 5081 2872; manuel.orozco@spglobal.com |
| Constanza M Perez Aquino, Buenos Aires + 54 11 4891 2167; constanza.perez.aquino@spglobal.com | |
| Omar A De la Torre Ponce De Leon, Mexico City + 52 55 5081 2870; omar.delatorre@spglobal.com | |
| Additional Contact: | Carolina Caballero, Sao Paulo (55) 11-3039-9748; carolina.caballero@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.