Moody’s downgrades Gafisa

Moody's America Latina said it downgraded Gafisa SA's corporate family ratings and senior secured ratings to B3 (global scale) and B2.br (national scale) from B2 (global scale) and Ba2.br (national scale rating).

The outlook is negative. This concludes the review process initiated on Dec. 16, 2016.

Moody’s said the downgrade follows the conclusion of the sale of 50% of Construtora Tenda SA (unrated) for R$320 million and of the spin-off of the remaining 50% to Gafisa's shareholders.

“With the sale, Gafisa's geographic footprint and product offering will be concentrated in the Sao Paulo and Rio de Janeiro metropolitan areas and in the commercial properties and middle and high income residential segments, which weakens the company's business profile and growth potential in the medium-term,” Moody’s said in a news release.

“Accordingly, Gafisa's future operating performance and cash flow generation will depend on the pick-up of sales in these segments and regions, which in turn depends on the continued improvement of Brazil's macroeconomic conditions, including declining interest rates and inflation, and a recovery of unemployment, household debt level and credit concession.”

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