Fitch cuts Grupo Kaltex, notes

Fitch Ratings said it downgraded Grupo Kaltex, SA de CVs long-term local and foreign currency issuer default ratings to B- from B and $320 million senior secured notes due 2022 to B-/RR4 from B/RR4.

The ratings remain on negative watch.

Fitch said the downgrades reflect its view of the company's tight liquidity compared to debt service and short-term debt.

Cash balance at the end of the year 2017 was Ps. 545 million, with short-term debt of Ps. 943 million (about Ps. 555 million correspond to revolving credit lines) and an interest coupon payment of $14.2 million in April 11, 2018.

During 2017, EBITDA deterioration led to a reduction in interest coverage, measured as EBITDA to interest expense to 1.7 times from 4.8 times in 2016.

Fitch said Grupo Kaltex's operations should stabilize, although at a weaker level than originally anticipated; management has implemented pricing initiatives and cost cutting measures to offset 2017's bad performance.

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