S&P affirms Posadas

Standard & Poor's said it affirmed the global scale corporate credit rating on Grupo Posadas SAB de CV at B, along with the B ratings on its $200 million notes due 2015 and $275 million unsecured notes due 2017, which includes a $50 million add-on.

The recovery rating on the notes is unchanged at 3.

The outlook is stable.

The affirmation reflects that although the company will use the proceeds of the sale of 11 hotels to pay down debt, its financial risk profile remains highly leveraged given expectations that the company's debt-to-EBITDA ratio will continue to be more than 5.0x, S&P said.

The company said it will use the $50 million add-on to its original $225 million unsecured notes due 2017 to refinance debt, the agency said.

The ratings also consider its weak business risk profile due to the cyclicality of the hotel industry, its geographic concentration in Mexico and its low profitability compared to its peers, S&P said.

The offsetting factors are the company's diversified hotel portfolio with well-recognized brands despite the recent sale of its South American division, the agency said, and its position as the largest hotel operator in Mexico.

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