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A Sovereign Milestone: LOC-Backed Commercial Paper May 99
Standard & Poors, May 1999
Abstract
Scoring a first in the sovereign sector, Mexico has issued commercial paper supported by an LOC. This structure enables Mexico to lower its financing costs, taking advantage of the higher credit rating of the LOC issuer. 'Up to now, many Latin American banks and large corporations have used LOC-backed commercial paper,' explained Helen Anagnostos, associate director in the LOC-Commercial Paper subsector of Financial Institutions Ratings at Standard & Poor's. 'Mexico is the first sovereign entity to use this structure.' Standard & Poor's rated the $500 million of commercial paper as 'A-1+', reflecting the short-term credit rating of the LOC issuer, Barclays Bank PLC, rather than the Mexican government's short-term rating of 'B'. The Mexican Ministry of Finance and Public Credit...
Companies mentioned in this report are: Barclays Bank PLC,Mexico
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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