CHICAGO--(BUSINESS WIRE)--Bogota will maintain its financial strength and the Development Plan Bogota Humana, which oversees infrastructure projects and financing strategy, during the district's mayoral recall process, Fitch Ratings says. Colombian President Juan Manuel Santos signed the dismissal of Gustavo Petro on March 19, and appointed the country's Minister of Labor Rafael Pardo as the district's mayor.
We incorporated the political risk associated with this event into Bogota's rating (long-term foreign Issuer Default Rating BBB).
We believe Bogota's credit strengths are sound financial performance, manageable debt metrics, a strong socioeconomic profile, and its significant GDP contribution to the country's economy. The district contributes approximately 25% of Colombia's GDP.
The district's direct debt balance has also been shrinking for several years. Direct debt totaled COP1.5 billion (USD752 million) as of Dec. 31, 2013. The main risks associated with the debt portfolio -- exchange rate exposure, variable interest rates, debt payout concentration, and liquidity levels -- are subject to constant district surveillance.
Bogota's city council recently approved COP3.037 billion (USD1,509 million) of new debt for transportation, education, health, and culture. An additional COP0.8 billion (USD400 million) was also approved for the first metro line in Bogota. That project will be partially borne by Colombia's government financing.
The main risks for the district are the increasing social and infrastructure needs of its growing population, particularly those related to transportation, and pension and retirement liabilities that have not been fully funded.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.