Nemak S.A.B. de C.V.

The stable outlook reflects our expectation that Nemak will post key credit metrics in line with its rating category that include debt to EBITDA in the 1.5x-2.5x range and funds from operations (FFO) to debt at the 35%-45% range for the next two years. We consider the company will continue obtaining new contracts and developing the current ones, as well as implementing operating efficiencies. We could downgrade Nemak if it posts weaker-than-expected credit metrics, with debt to EBITDA higher than 3.0x, FFO to debt below 30%, or free operating cash flow (FOCF) to debt below 10% on a consistent basis. This could result from poor business conditions in Nemak's key markets, cooling economic conditions that undermine the company's competitive position,

...Uncertainty for the auto industry in 2019. We believe that there's still some level of uncertainty for the auto industry due to the lack of clarity in the operating strategy of main original equipment manufacturers (OEMs) in the U.S. and eurozone. This is primarily as a result of government and economic changes in both regions, reducing our forecast on light-vehicle production for 2019....

Full Report