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City of Xalapa Assigned 'mxA-' Rating; Outlook Stable

    NEW YORK (Standard & Poor's) Oct. 10, 2003--Standard & Poor's Ratings 
    Services said today that it assigned its 'mxA-' national scale rating and 
    stable outlook to the City of Xalapa, State of Veracruz, United Mexican 
         According to Credit Analyst Paulina Campos, the rating reflects Xalapa's 
    adequate financial perfomance, improved property valuation and tax 
    collection systems, and absence of direct debt. "The stable outlook 
    reflects Standard & Poor's expectation that Xalapa will continue to 
    strengthen its collection of local revenue while consistently updating 
    land values to allow for sustained future revenue growth," Ms. Campos 
    said. "A further improvement of the city's management systems and tools 
    (i.e., budgeting and information systems) should help build a stronger 
    institutional framework, a key factor in determining an eventual rating 
    change," she added.
         Xalapa has maintained a solid budgetary performance. The city's operating 
    balance to operating revenue was 23.6% at year-end 2002. While there was a 
    3% after capital expenditure to total revenue deficit that was mainly 
    financed with existing cash reserves and by delaying payments to 
    suppliers, Xalapa anticipates producing a balanced budget in 2003. 
         "The city's improved valuation and collection systems have resulted in 
    95.4% of the tax revenue budgeted for 2003 collected as of July," noted 
    Ms. Campos. "Xalapa has never issued debt. With the purpose of enhancing 
    its liquidity position, Xalapa has a credit line totaling 4.3% of 
    operating 2003 budgeted expenditure," she concluded.
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    Contact the analysts:

    • Paulina Campos, Mexico City (52) 55-5279-2043; Horacio Aldrete-Sanchez, Mexico City (52) 55-5279-2042; Jane Eddy, New York (1) 212-438-7996