Overview of Tlaquepaque’s Creditworthiness
Moody’s Local México has affirmed the long-term credit rating of Tlaquepaque at AA-.mx, with a stable outlook.
Key Factors Contributing to the Rating
- Operating Surpluses: Tlaquepaque has consistently maintained operating surpluses averaging 8.9% of its operational income between 2020 and 2024.
- Positive Financial Position: The municipality has demonstrated a positive financial position, averaging 1.1% of its total income.
- Growing Own-Source Revenue: Tlaquepaque has shown a steady improvement in its own-source revenue, increasing from 27.6% in 2020 to 31.6% in 2024.
Areas for Improvement
Moody’s highlighted that managing liquidity more effectively is the primary credit challenge for Tlaquepaque. Although the municipality’s credit quality remains robust compared to other local entities, its liquidity has weakened. The cash-to-current liabilities ratio dropped from 2.2 times in 2020 to 0.9 times in 2024 due to the settlement of accumulated debts from previous years.
Pension Obligations
Tlaquepaque has no unfunded pension liabilities, as its obligations are covered through the State of Jalisco Pension System (IPEJAL) to which it makes monthly contributions.
Outlook and Future Prospects
The stable outlook reflects Moody’s expectation that Tlaquepaque will continue to maintain solid operating balances (13.6% of operational income) and balanced financial positions, consistent with its historical trend.
Potential Rating Enhancements
- Sustained Increase in Own-Source Revenue: A consistent rise in own-source revenue could positively impact Tlaquepaque’s credit rating.
- Strengthened Liquidity Position: Improving the liquidity position would further bolster Tlaquepaque’s creditworthiness.
Potential Rating Deterioration
Moody’s noted that a weakening of balances or a decline in liquidity, along with financial transparency deficiencies, could negatively affect Tlaquepaque’s credit rating.
Key Questions and Answers
- What is the current credit rating of Tlaquepaque? Moody’s Local México has affirmed the long-term credit rating of Tlaquepaque at AA-.mx, with a stable outlook.
- What factors contributed to Tlaquepaque’s strong credit rating? Operating surpluses, positive financial position, and growing own-source revenue have all played a role in Tlaquepaque’s robust creditworthiness.
- What are the primary credit challenges for Tlaquepaque? Managing liquidity more effectively is the main credit challenge, despite Tlaquepaque’s strong credit quality compared to other local entities.
- How does Tlaquepaque address its pension obligations? Tlaquepaque covers its pension obligations through the State of Jalisco Pension System (IPEJAL) via monthly contributions.
- What could potentially enhance Tlaquepaque’s credit rating? Sustained increases in own-source revenue and a strengthened liquidity position could positively impact Tlaquepaque’s credit rating.
- What factors could negatively affect Tlaquepaque’s credit rating? Weakening balances, declining liquidity, and financial transparency deficiencies could lead to a deterioration in Tlaquepaque’s credit rating.
