S&P lowers Salini Impregilo

S&P said it lowered the long-term rating on Salini Impregilo SpA to BB- from BB and removed it from CreditWatch with negative implications.

The negative outlook reflects a view that there is still meaningful downside risk for the rating, given the group's track-record of weak cash flow generation, short-term financial burden related to the potential acquisition of Astaldi and the capital structure's increasing refinancing risk, S&P said.

The downgrade reflects the company's weak operating cash flow in 2018, mainly owing to delayed payments from projects in Ethiopia and fewer projects in Italy, the agency said.

The group's 2018 adjusted financial leverage was consequently significantly worse than expected, although the sale of the plants and paving division garnered €506 million, S&P said.

The agency said it now anticipates that funds from operations-to-debt will be significantly lower than 20% in 2019.

Salini Impregilo has progressively shifted its operations to the less risky United States, Australia and Middle East, while reducing its presence in Africa, S&P said.

The outlook is negative because the short-term financial burden that could result from the Astaldi acquisition, the agency said, as well as the group's increasing refinancing risk.

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