Sunday, May 27, 2018

Become part of our community

Medellin Alpujarra Government Center Medellin Alpujarra Government Center Source: Stormzand Photography

Fitch: Medellin Municipal Bonds Get ‘AAA(col)’ Long-Term Rating

Rate this item
(1 Vote)

Wall Street bond rater Fitch announced November 23 that it affirmed the city of Medellin’s national long-term bond rating at “AAA(col)” with a “stable” outlook and the short-term rating at 'F1+(col)'.

Fitch has also affirmed the Long-Term Issuer Default Rating (IDR) at “BBB.”

While the rating outlook “remains negative,” this outlook “reflects the ‘negative outlook’ assigned to Colombia,” according to Fitch.

“The affirmation of the ratings reflects Medellin’s importance in national context as well as its financial strength supported by a good financial administration; operating margins reversed the negative trend; the composition of debt in foreign currency and the currency exchange risk although showing manageable debt metrics, and the important financial support from Empresas Publicas de Medellin (EPM, Foreign and Local Currency IDRs 'BBB+'),” according to Fitch.

“Fitch considers Medellin’s debt profile to be a strong rating factor with stable trend, reflecting still-high debt burden but manageable debt sustainability metrics.

“Medellin’s debt of COP$1.19 trillion [US$387 million] in 2015 represented 2.3 years of the entity’s current balance, lower than the median of entities rated in the 'BBB' category. Out of that figure, 67% of it is foreign debt, which still is not hedged to the exchange rate risk. As a counterbalancing effect, debt service to operating balance represented 18.7% as of the end of 2015.

“As per the internal debt portion, a first program of bond for COP$141,000 million [US$45.8 million] notes will redeem at the end of 2016, which is already budgeted and does not represent liquidity pressures for the entity. The outstanding program for COP$248,560 million [US$80.8 million] in two series matures in 2024 and 2044. The administration has continued its efforts to reduce the risks exposure to the exchange rate although 2016 has not presented favorable market conditions.

“As per the economic factor, Fitch considers it to be strong with stable trend, denoting the relative importance of the city to the national economy representing almost 7% of Colombian GDP.

“Its economy is mainly based on services and commerce although it still maintains a large number of industries important to the national and international trade. It sustains strong socioeconomic indicators with higher coverage of public services, education and health compared to national standards.

“Current administration is led by Mayor Federico Gutierrez, who was elected with no affiliation to any party but with a community movement who promoted his candidature.

“Fitch acknowledges the fiscal capacity of the administration to improve toll collections particularly now that this entrant government has implemented a new model for efficiently managing tax collection coupled with efforts to restrain operating expenditures.

“Medellin benefits from the important dividends, both common and special, received from EPM permitting the municipality to be more flexible to allocate them to finance further capital expenditure. As a whole, dividends have represented around 20% of total income of the city since 2012,” the rating agency added.

Read 2875 times Last modified on Last modified on November 30 2016

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.


MEDELLÍN PHOTOS by Gabriel Buitrago (click to enlarge)


Volunteering February 20 2017 0
As the late North American philosopher A.B. Johnson once quipped, “mighty oaks from little acorns…

About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

Medellin Herald welcomes your editorial contributions, comments and story-idea suggestions. Send us a message using the "contact" section.

Contact US

logo def
Medellin Herald: Find news, information, reviews and opinion on business, events, conferences, congresses, education, real estate, investing, retiring and more.
  • COL (4) 386 06 27
  • USA (1) 305 517 76 35
  •  This email address is being protected from spambots. You need JavaScript enabled to view it. 
  • Medellin, Antioquia, Colombia

Medellín Photo Galery

Medellin, contrasting colors and styles by Gabriel Buitrago