Fitch downgrades Axtel

Fitch Ratings said it downgraded Axtel, SAB de CV's long-term foreign- and local-currency issuer default ratings to BB- from BB. Fitch also lowered Axtel's national long-term rating to A-(mex) from A(mex) and the 2024 dollar-denominated senior unsecured notes to BB-. The agency also revised the outlook to negative from stable.

“The downgrade and negative outlook reflect continued weakness in the company's government services business and headwinds to the infrastructure business. Both have heavily weighed on EBITDA in recent quarters, leading to a deterioration in the firm's credit profile. A backdrop of macroeconomic weakness and challenging competitive dynamics cloud the company's ability to recover to a stronger credit profile over the rating horizon. Additionally, uncertain conditions in credit markets constrain ratings,” Fitch said in a press release.

The agency said it estimates net debt/EBITDA to reach 3.9x in fiscal 2022 before improving slightly to 3.7x in fiscal 2023.

“Moreover, the company's weakened credit profile has led to greater uncertainty in refinancing its 2024 notes,” Fitch added.

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