Fitch upgrades Lafarge

Fitch Ratings said it upgraded Lafarge SA’s long-term issuer default ratings and senior unsecured rating to BBB- from BB+.

The outlook is positive.

The upgrade reflects Lafarge’s strong strategic ties and pending operational integration with Holcim Ltd. following the completion of the merger between the two companies to create LafargeHolcim, Fitch said.

The agency said it maintains a one-notch differential between the two companies because Holcim does not currently guarantee Lafarge’s substantial debts that have no recourse to Holcim assets, and also due to a lack of cross-default to Holcim.

The positive outlook reflects the potential reduction of Lafarge’s debt, which may result in an alignment with Holcim’s ratings, Fitch added.

The merger will create the world’s largest building materials company with combined pro-forma net sales of CHF 33 billion in 2014, the agency said.

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