Fitch maintains SADM's A- rating despite state government downgrade

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Monday, June 20, 2011

Fitch Ratings has maintained its A-(mex) rating for Mexico's Monterrey water utility SADM, despite recently downgrading Nuevo León state, the ratings agency said in a report.

The utility was not affected by Nuevo Leon's downgrade to A- as it has a "low dependence on the state's financial support."

Fitch has affirmed SADM's rating due to the company's "outstanding efficiency, coverage and services and high levels of infrastructure investment," the report said.

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Supplying water to 1.1mn users, the utility's total income for 2010 was 3.46bn pesos (US$291mn).

In 2010, SADM invested 2.08bn pesos in infrastructure. Work included repairing damage caused by Hurricane Alex, the Monterrey V potable water project and work to improve coverage in northern Monterrey.

Despite maintaining its rating, the authority has a high level of debt which, although long-term, could "limit the organization's financial flexibility in the face of adverse events," Fitch said.