Fitch rates Alto Palermo note B+

Fitch Ratings said it assigned B+ foreign- and local-currency issuer default ratings to Alto Palermo SA, assigned B+/RR4 ratings and AA-(arg) national long-term ratings to the company's proposed $120 million senior unsecured note due 2017 and proposed $50 million argentine peso-linked notes with a final maturity in 2012 and affirmed its national long-term issuer rating at AA-(arg).

The outlook is stable.

The agency said Alto Palermo's ratings are supported by its strong business position within the Argentine shopping center industry, the high quality and strategic location of Alto Palermo's shopping centers, the high operating margins of the business and the strong growth of Alto Palermo's cash generation in the past three years, which was driven by a strong increase in tenant sales, an improvement in leasing conditions and an occupancy rate of about 99%.

Balanced against these supportive factors are concerns about the high correlation of shopping center tenant sales with the strength of the local economy, the lack of international geographic diversification of Alto Palermo's cash flow, the dividends needs of the largest shareholder, IRSA Inversiones y Representaciones SA, and the currency mismatch following the debt issuance between its dollar-denominated debt and peso-denominated cash flow, Fitch said.

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