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Prepared by M. Vera Martin (ICM).
Productive investments are not defined.
Disposable income is measured as the sum of own revenues and the nonearmarked component of federal transfers to states (participaciones, excluding transfers to municipalities), which is the main source of revenues for the states. See Section F for a more detailed analysis on the revenue structure of states.
The inability to service debt was not due to short maturities. Average maturity of subnational debt stood at 6.5 years by end-1994, with San Luis de Potosi being the state with lowest average maturity (at 2.7 years).
When participaciones are used as collateral, all transfers received through Ramo 28 are considered, including the 20 percent of the federal revenues (Recaudacion Federal Participable, RFP), 2.1 percent of RFP for economic incentives, and 1 percent of RFP for coordination rights.
According to bank regulation, the exceptional regime implied that all subnational lending was exempted from normal provisioning requirements and exposure concentration limits.
The internal structure of the Secretary of Finance was modified for its coordination unit with federal entities (UCEF) to act as the only window for states and municipalities, and to take over the registry of subnational debt.
The state of Campeche received an A local-scale rating from Standards&Poors on September 23, 2004.
Debt contracted by the Federal District needs approval from the federal government and is incorporated in the annual budget.
In pledging resources to the master fund, some states have defined a percentage of its revenues to be allocated for an specific issuance. Other states have allocated that percentage to the master fund, without assigning a particular percentage to each financing instrument.
The reserve account can be called on if the principal and interest accounts do not hold sufficient funds.
An acceleration clause is a provision in the bond that typically allows the bondholders to declare the full amount due and payable immediately upon occurrence of some event of default as described in the bond’s features.
There is not sufficient data available to analyze interest rate risks on subnational debt.
The study was prepared by Hewitt and Associates and refers to 29 states.