...The Rating Watch Negative reflects increased pressure on Alpek S.A.B. de C.V.'s capital structure due to its acquisition of Petroleo Brasileiro S.A.'s polyester assets in Brazil for USD385 million as its cash flow is facing depressed polyethylene terephthalate (PET) margins in the U.S. In Fitch Ratings' view, this acquisition, which is subject to regulatory approval, combined with lower EBITDA would increase the company's net leverage to 3.2x from 2.0x for the LTM ended June 30, 2017, if financed primarily with debt-like instruments. Fitch would view funding based on equity or equity-like sources or asset sales positively, and it would likely result in the removal of the Rating Watch Negative and assignment of either a Stable or Negative Outlook at `BBB¡'. The Outlook would depend on Fitch's deleveraging expectations because the transaction is occurring during a period of market weakness, elevated capex and shareholder dividend distributions. An acquisition heavily funded with debt would...
