Fitch applies BB- to Axtel notes

Fitch Ratings said it assigned a BB-(EXP) rating to Axtel SAB de CV's proposed issuance of up to $500 million of senior unsecured notes due 2024.

Proceeds are expected to be used to refinance the company's existing bank loans and related issuance expenses.

Fitch said the ratings reflect Axtel's solid market position in the enterprise telecom business segment, achieved by the merger with Alestra in 2016, and limited exposure to retail segments where competitive intensity is high.

As a subsidiary of Alfa SAB de CV (BBB-/stable), one of the largest business groups in Mexico, the company has good access to financing, which bolsters its financial flexibility, the agency explained.

“The ratings are tempered by Axtel's weak financial profile for the rating category, small market positions in Mexico and volatile demand outlook from its government clients,” Fitch said in a news release.

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