S&P cuts Fomento Economico Mexicano

S&P said it lowered its issuer and issue ratings for Fomento Economico Mexicano SAB de CV (Femsa) to BBB+ from A- and removed them from CreditWatch with negative implications. The outlook is stable. The agency also affirmed the mxAAA national scale rating. The national scale outlook remains stable.

Femsa completed its acquisition of unrated Valora Holding AG for about $1.2 billion with balance sheet cash.

“We now forecast Femsa's adjusted pro forma leverage to be about 2.3x by year-end 2022, before improving below 2x in the next 24 months considering a rapid integration. This signals a departure from Femsa's financial policy of leverage below 1.5x that has supported the A- rating,” the agency said in a press release.

The outlook reflects an expectation that stable EBITDA growth, strong cash flows and a disciplined financial policy will keep leverage within 1.5x-2x by the end of 2024, S&P said.

© 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.