Fitch: Grupo Cementos on watch

Fitch Ratings said it placed Grupo Cementos de Chihuahua, SAB de CV’s long-term local- and foreign-currency issuer default ratings of BB on Rating Watch negative following news that it reached a preliminary agreement to acquire $400 million of assets from Cemex, SAB de CV.

The company’s local-currency issuer default rating of BB also was placed on negative watch, along with the BB rating on its $260 million senior notes due 2020.

Fitch said it anticipates it will downgrade the company’s rating by one-notch to BB- after the completion of the acquisition, assuming the asset purchase is financed with a combination of available cash and new debt.

Under this scenario, the company will have meaningfully higher leverage for two- to three-years, which would reduce its financial flexibility to levels more consistent with a BB- rating, the agency said.

The transaction is pending regulatory approvals and other customary conditions, but is expected to close before year-end 2016, Fitch said.

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