Bogota Outlook Revised To Negative Following Same Action On Colombia; 'BBB-' Ratings Affirmed

  • On March 26, 2020, we revised our outlook on Colombia to negative from stable due to increased risks to external liquidity, debt, and growth, stemming from the recent drop in oil prices and heightened by the global impact of COVID-19. We also affirmed our 'BBB-' foreign currency issuer credit rating on Colombia.
  • We expect the weaker economic scenario to hurt Bogota's fiscal performance, potentially hindering its liquidity position.
  • As a result, we're revising the outlook on Bogota to negative from stable. We're also affirming our 'BBB-' local and foreign currency issuer credit ratings on Bogota.
Rating Action
SAO PAULO (S&P Global Ratings) March 27, 2020--S&P Global Ratings revised its outlook on Bogota Distrito Capital to negative from stable. We also affirmed its 'BBB-' foreign and local currency issuer credit ratings. At the same time, we affirmed our 'BBB-' debt rating on Bogota's senior unsecured debt of $300 million, issued in 2007 and due in 2028.
The negative outlook on Bogota reflects our expectation of the more challenging economic and fiscal scenario over the next 12-24 months, following the negative impact of the recent external shocks in Colombia. While Bogota's economy doesn't depend on oil activities, the drop in oil prices and the impact from COVID-19 have caused severe market volatility, as well as a sizable drop in demand and investment in Colombia. Therefore, we expect the city's fiscal revenues to worsen, which combined with countercyclical spending programs should result in a worsening budgetary performance and liquidity position in 2020-2021. Thus, we believe the city could not withstand severe stress tests for us to rate it above the sovereign, and a downgrade of Colombia would result in a downgrade of Bogota.
We could revise our outlook to stable in the next 12-24 months if the district were to build a strong track record of policy implementation, providing evidence of the city's higher-than-expected resilience under the new economic and fiscal scenario. This would include maintaining strong liquidity and prudent debt policies. In case of a sovereign downgrade, Bogota would also need to be able to withstand a severe economic (materially greater than our current expectations of Colombia's economic downturn), inflation, and liquidity stress test in order to keep its creditworthiness above the sovereign's.
The outlook revision on Bogota follows our recent rating action on Colombia (see " ," published on March 26, 2020). The rating action on Bogota reflects our view of a more challenging economic outlook due to the drop in oil prices heightened by COVID-19. This scenario is likely to result in a worsening budgetary performance and liquidity position.
The 'BBB-' ratings on Bogota reflect its adequate financial management, with broad continuity in prudent policies through changes in administration, but with delays in executing capital projects. The ratings already incorporate our expectation of wider budget deficits and growing debt as the city carries out its ambitious infrastructure program. The ratings also consider Bogota's economy, which accounts for about 25% of the national GDP, and will be key to drive economic growth in the country in following years, for example, through executing major infrastructure works. We consider the institutional framework for Colombian local governments to be predictable but not fully transparent, with accounting standards that compare poorly with respect to international peers.

Key Statistics

Table 1

Bogota Distrito Capital Selected Indicators
(Mil. COP)201720182019bc2020bc2021bc2022bc
Operating revenues11,560,32312,201,61813,779,40814,106,00715,289,42915,963,458
Operating expenditures10,763,37510,800,14812,793,49613,825,84614,245,12914,816,829
Operating balance796,9471,401,470985,912280,1611,044,3001,146,630
Operating balance (% of operating revenues)6.911.
Capital revenues1,818,2133,167,4991,521,0141,618,5221,722,2352,022,054
Capital expenditures3,486,2265,328,8324,830,8183,531,3293,990,4014,708,673
Balance after capital accounts(871,066)(759,863)(2,323,892)(1,632,646)(1,223,866)(1,539,989)
Balance after capital accounts (% of total revenues)(6.5)(4.9)(15.2)(10.4)(7.2)(8.6)
Debt repaid96,19990,338107,469110,801114,125231,673
Gross borrowings60,00030,0001,449,999435,2781,617,4001,382,515
Balance after borrowings(907,265)(820,201)(981,363)(1,308,168)279,409(389,148)
Direct debt (outstanding at year-end)1,215,0441,192,0812,541,4572,874,8844,378,1595,529,001
Direct debt (% of operating revenues)10.59.818.420.428.634.6
Tax-supported debt (outstanding at year-end)1,215,0441,192,0812,541,4572,874,8844,378,1595,529,001
Tax-supported debt (% of consolidated operating revenues)10.59.818.420.428.634.6
Interest (% of operating revenues)
Local GDP per capita (single units)29,279,17830,628,79432,357,81433,441,25136,175,63737,776,904
National GDP per capita (single units)19,127,67120,121,26621,615,17222,293,83423,610,14324,809,058
The data and ratios above result in part from S&P Global Ratings' own calculations, drawing on national as well as international sources, reflecting S&P Global Ratings' independent view on the timeliness, coverage, accuracy, credibility, and usability of available information. The main sources are the financial statements and budgets, as provided by the issuer. bc--Base case reflects S&P Global Ratings' expectations of the most likely scenario.

Ratings Score Snapshot

Table 2

Ratings Score Snapshot
Key rating factorsScores
Institutional framework4
Economy  4
Financial management   3
Budgetary performance  4
Liquidity    3
Debt burden   2
Issuer credit ratingBBB-
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