Moody's raises ratings for Durango city water utility

Moody's has raised its national scale rating to Baa3.mx from Ba3.mx and global scale rating to B2 from B3 for Sideapa, the waterworks company for Mexico's Durango city, the international investors services agency said. The new ratings reflect Sideapa's improved financial and debt profile. Sideapa paid its short-term debt last year, while long-term debt requirements represented 3.3% of operating income in 2004 compared with 7.7% in 2002, Moody's said. Further, the utility has kept water rates the same over the past five years while it started to charge for water treatment services and cut discounts in 2002, thereby increasing operating income 45% since 2002. But the utility's capital investment requirements and difficulty in increasing rates have prevented Moody's from raising ratings, the agency said. Sideapa serves 122,000 residents with 96% water and 94% drainage coverage.