S&P revises Alfa outlook to stable

S&P said it revised its outlook for Alfa SAB de CV to stable from positive and affirmed its BBB- issuer rating and BB+ senior unsecured foreign-currency rating.

The agency said it now estimates the company will fall short of its upgrade triggers over the next 12 to 24 months. Alfa owns Alpek SAB de CV and Sigma Alimentos SA de CV. S&P also affirmed Sigma’s BBB- ratings and revised Sigma’s outlook to stable from positive reflecting the action it took on its parent.

“Alfa's deleveraging trajectory has been derailed by weaker financial results of its petrochemical subsidiary, Alpek, given its lower-than-expected EBITDA because of less favorable business conditions. Also, Sigma engaged in recent acquisitions that have increased net debt in U.S. dollars. For the 12 months ended June 30, 2023, Alpek's EBITDA decreased by about 16%, while Sigma's fell by 3% in reported currency (Mexican peso) but increased 2% in U.S. dollar terms.

“On the other hand, debt contracted at the holding company level has dropped slightly, in line with management's plan to complete the reorganization, although not enough to compensate for the EBITDA shortfall,” S&P said in a statement.

The agency said it expects Alfa to maintain net debt to EBITDA within 2.5x-3x.

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