Fitch Publishes Global Criteria to Rate Specific Securities of Subnationals in Emerging Markets

MONTERREY, Mexico--()--Fitch Ratings has published its global criteria titled 'Rating Specific Securities of Subnationals - Local and Regional Governments in Emerging Market Countries'. The report describes the main factors considered by Fitch to assign ratings on a national scale to securities supported by pledged revenues of local and regional governments in emerging market countries around the world.

Revenues used to secure and prioritize debt service typically include federal or other specific central government transfers, as well as cash flows derived from property taxes, payroll taxes, vehicle matriculation taxes, or other taxes and revenues where the subnational entity continues to own and control the revenue. While sources of revenue flows and the structures designed to capture these flows may vary from country to country, these criteria will outline the principles necessary to apply uplift from subnationals' issuer ratings on national ratings scales to debt instruments they may issue.

Fitch has identified five ratings drivers that affect the securities ratings covered under the criteria:

--Credit profile of the issuer;

--Analysis of the revenue pledged as a source of payment;

--Structure of the financing, and the protection it provides for holders of the instrument;

--Debt service coverage ratios and any credit enhancements; and

--Legal protection for creditors.

To date, this criteria has been principally applied to transactions in Mexico, where Fitch covers and rates to date close 286 subnational securities.

No changes to existing ratings are expected as a result of the publication of the criteria, which replaces the report titled 'Rating of Specific Debt Instruments of Subnationals', published on March 4, 2010.

The new criteria report is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Rating Specific Securities of Subnationals (Local and Regional Governments in Emerging Market Countries)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748224

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Humberto Panti Garza
Regional Group Head Latin America - International Public Finance
+52 81 83999152
Fitch Mexico, S.A. de C.V.
Ave. Prolongacion Alfonso Reyes 2612, Piso 8
Monterrey, NL, Mexico
or
Fernando Mayorga
Global Group Head - International Public Finance
+34 933 238407
or
Media Relations:
Peter Fitzpatrick, London, +44 20 3530 1103
Email: peter.fitzpatrick@fitchratings.com
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Humberto Panti Garza
Regional Group Head Latin America - International Public Finance
+52 81 83999152
Fitch Mexico, S.A. de C.V.
Ave. Prolongacion Alfonso Reyes 2612, Piso 8
Monterrey, NL, Mexico
or
Fernando Mayorga
Global Group Head - International Public Finance
+34 933 238407
or
Media Relations:
Peter Fitzpatrick, London, +44 20 3530 1103
Email: peter.fitzpatrick@fitchratings.com
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com