Fitch: Concerns for Obrascon Huarte Lain

Fitch Ratings said that Obrascon Huarte Lain's proposed initial public offering of its Mexican subsidiary for up to $1.1 billion will reduce leverage, but concerns remain.

It currently has a long-term issuer default rating of BB- and senior unsecured rating at BB-.

The outlook is negative.

Following this transaction, the company will remain somewhat over-leveraged, Fitch said.

Projected net leverage on a recourse basis at about 2.5x as of 2010 is still high for construction industry players, the agency said.

Tolerance to debt is low due to significant operational risks such as cyclical demand, thin profit margins and the possibility of project delays and cost overruns, Fitch said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.