S&P: Geo SAB outlook negative

Standard & Poor's said it affirmed the BB- long-term corporate credit rating and its mxA- national scale rating on Corporacion Geo SAB de CV and revised the outlook to negative from stable.

"The rating action reflects Geo's higher-than-expected use of short-term debt, which has increased its refinancing needs during 2009, and our expectations regarding the high working capital requirements needed to sustain the company's growth plans for the year, which could limit cash flow generation," S&P analyst Laura Martinez said in a statement.

"However, we believe that Geo continues to have sufficient cash reserves and access to refinancing options that would allow it to meet its short-term commitments.," Martinez said.

Ratings are limited by the company's aggressive financial policy and accounting practices and its use of financing strategies that have required restricted cash balances, the agency said.

They also reflect the intense working capital needed to sustain growth targets, as well as its greater use of external financing, the agency added.

Ratings are supported by Geo's position as one of the leading homebuilders in Mexico, its geographic diversification and scale, and its diverse product line, S&P noted.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.