Moody's downgrades PDG Realty

Moody's America Latina said it downgraded PDG Realty SA Empreendimentos e Participacoes’ corporate family rating to B3 from B1 on the global scale and to B1.br from Baa3.br on the national scale, R$250 million senior secured bank credit notes due 2016 to B3/B1.br from B1/Baa3.br and R$140 million senior unsecured debentures due 2018 to Caa1/Caa1.br from B2/Ba2.br. The outlook remains negative.

The agency said the downgrade reflects PDG's increased liquidity risk due to large corporate debt maturities over the next six to eight months and the challenging refinancing conditions in 2015 as per the weaker industry fundamentals for homebuilders in Brazil.

The negative outlook reflects the challenges ahead of the management to streamline the company's operations and address its liquidity situation in a timely fashion to meet the upcoming debt payments and promote an effective leverage reduction, Moody’s said.

The B3/B1.br corporate family ratings continue to balance PDG's significant position in the Brazilian homebuilding market against its high leverage ratios, liquidity risks in the near term and Moody's expectation that the company's financing plans and ongoing execution challenges will result in a much smaller and less diversified company in the medium term, the agency said.

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