Moody's rates Ara Ba2

Moody's de Mexico said it assigned an A2.mx national scale issuer rating and a Ba2 global scale local currency issuer rating to Consorcio Ara SA de CV This is the first time Moody's has rated the Mexico-based company.

The outlook is stable.

The ratings reflect Ara's strong financial position and the financial flexibility that has allowed it to respond effectively to the volatile Mexican property market, the agency said. Ara has produced consistently strong profitability and maintained sound liquidity and a conservative capital structure. Ara is a public company with a good corporate infrastructure that enhances transparency and governance.

Moody's said Ara's primary credit challenges are that it relies on the Mexican economic and political environment and the high costs of land and land development. Furthermore, the housing development market is fragmented, and homes are built on a speculative basis. Finally, the small amount of debt the company does have is short-term debt, which the agency said can create liquidity and funding problems.

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