Moody's rates CIE debt A2.mx

Moody's Investors Service said it assigned an A2.mx rating to Mexico-based Corporacion Interamericana de Entretenimiento, SA de CV (CIE)'s proposed certificados bursatiles due 2009, which will be issued in an amount of up to Ps. 500 million. The agency also affirmed CIE's A2.mx Ps. 1.4 billion certificados bursatiles due 2010.

The outlook remains negative.

The proceeds of the proposed certificados bursatiles will be used to prepay a bank loan and to prefund notes payable in the Mexican capital market in March. Thus, the transaction is neutral to CIE's leverage and debt maturity profile.

The agency said the ratings are supported by CIE's attractive margins, dominant market position in the out-of-home entertainment sector in Mexico and Moody's favorable expectations for CIE's gaming division.

However, the ratings are constrained by CIE's high leverage - adjusted debt to EBITDA was 4.7x for the last 12 months ended in September - and overall volatile businesses, Moody's said. In addition, high capital expenditures and increased interest expenses have resulted in continued negative free cash flow.

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