Fitch gives Grupo Axo, notes BB

Fitch Ratings said it assigned first time foreign- and local-currency long-term issuer default ratings of BB to Grupo Axo SAPI de CV. Fitch currently rates Axo's national long-term rating A(mex). Fitch also gave a BB to Axo's planned $325 million of senior unsecured notes. Proceeds will be used entirely to refinance debt.

“The ratings reflect the company's business position as one of the main apparel operators in Mexico, supported by a diversified portfolio of well-known brands divided into four business segments: full-price, athletics, off-price and digital. The ratings also consider the company's long-term relationships with suppliers and real estate developers as well as its track record and understanding of its market. Axo's ratings also reflect its growth strategy through acquisitions funded with a combination of debt and equity capital increases,” Fitch said in a press release.

The agency also assigned a negative outlook. “The negative outlook reflects the uncertainty regarding additional mobility restriction measures from the government to contain the pandemic and consumer discretionary spending concerns, which may delay deleveraging to levels that are commensurate with the rating by 2022-2023,” Fitch said in a press release.

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