OREANDA-NEWS. Fitch Ratings has affirmed Bogota, Capital District of Colombia's ratings, as follows:

-- Long-term foreign Issuer Default Rating (IDR) at 'BBB';
-- Long-term local currency IDR at 'BBB+';
-- National Rating at 'AAA (col)';
-- Short-term National Rating at 'F1+ (col)'.

In addition, Fitch affirms:

--USD300 million equivalent, 9.75% Colombian Peso-denominated notes due 2028, at 'BBB';
--COP2,000,000 million notes, at 'AAA (col)'.

The Rating Outlook is Stable.

The rating action reflects Bogota's financial strength as well as its manageable debt metrics, including debt projections.

KEY RATING DRIVERS
Bogota?s ratings reflect its solid operating performance with high operating margins and its conservative debt policy. Also considered in the rating action are the District's strong socio-economic profile and weight in the national economy in terms of GDP contribution. Political risk associated with the public sector and quality of the administration have been incorporated as well.

In Fitch's view, the main risk or limitation for Bogota is the increasing social and infrastructure needs of a growing population, particularly those related to transportation.

Bogota is the headquarters of the nation's most important legislative, judicial and economic institutions. It is also the most populated city in the country, with 7.8 million inhabitants. The District contributes 25% to the national GDP, establishing itself as the largest economy in Colombia.

In 2014, tax revenues represented approximately 63% of its total revenues, climbing to COP6.4 trillion (USD2,465 million), keeping annual growth rates supported by the District's tax management model, good track record of tax collection and the sound economy of the region. The positive revenue trends of the last three years have registered growth rates superior to 8% during the mentioned period.

Bogota's operating margin diminished in 2013-2014; the decline was largely attributable to an increase in operating expenses related to social policy and major infrastructure capital expenditures. Nevertheless, the District has seen good fiscal and financial performance with an operating balance of 23.6% of its operating revenue. As of April, the upward trend in revenues and capital expenditure has continued; Fitch estimates that operating margins will remain at approximate 20% of operating revenue. Such operating margin compares favorably with international standards and is in accordance with the risk level assigned.

The District maintains a conservative debt policy, focused on long-term external debt. By May 2015, the debt level rose to COP1.58 trillion (USD603 million), representing 80% of its external debt. The leading risks linked to its debt portfolio such as exchange rate risk, interest rate fluctuations and concentration of capital amortization, as well as liquidity levels, are factors watched closely by the District.

By 2014 and according Bogota?s estimations, the interest-to-operational savings ratio rose to 1.8%, significantly low relative to the maximum 40% established by the Ley 358 (Law 358). On the other hand, debt represented 18.4% of current revenues at the end of the year, below the 80% maximum established as a limit in Law 358.

The District administration, through its Plan de Desarrollo Bogota Humana, plans the realization of important infrastructure and mobility projects based on their financing strategy of greater tax revenues and transfers. Among their major projects are the Metro of Bogota and the Integrated System of Mass Public Transportation, which are considered to have national support. Similarly, they expect additional resources through a financial credit of COP3.837 trillion (USD1,488 million) approved by the Concejo Distrital. Fitch will consider the debt incurred, forecasting an increase in its indicators over the next years that is in line with the rating of the District given its financial strength.

According to Bogota the pension liabilities amounted to COP7.4 trillion and the coverage is 68.9%, which has been financed according to Law 549 from 1999.

RATING SENSITIVITIES
The Stable Outlook reflects that Fitch's sensitivity analysis does not foresee any developments that would lead to a rating action.

An upgrade of the sovereign rating, accompanied by Bogota's solid operating performance, could trigger a positive rating action. The main factors that individually or collectively, could lead to a negative rating action include: a significant debt increase (short-term and/or long-term), a substantial deterioration in operating margins and cash levels, and persistent budget deficits.