Research Update: CIMIC Group 'BBB' Rating Affirmed Despite Reduced Financial Buffer; Outlook Remains Stable

In our opinion, CIMIC Group can absorb the financial impact of both its exit of BIC Contracting's (BICC) operations in the Middle East, and the higher leverage at its joint venture Ventia Pty Ltd., following its proposed acquisition of Broadspectrum Pty Ltd. However, these transactions, together with a material increase in factoring obligations over the past two to three years, have reduced CIMIC's financial buffer at the current rating level. On Feb. 20, 2020, S&P Global Ratings affirmed the long- and short-term issuer credit ratings of 'BBB/A-2' on CIMIC. The stable outlook reflects that on CIMIC's ultimate parent ACS, Actividades de Construccion y Servicios SA (ACS, BBB/Stable/A-2), given our view that CIMIC and its immediate parent Hochtief are core subsidiaries

...- In our opinion, CIMIC Group can absorb the financial impact of both its exit of BIC Contracting's (BICC) operations in the Middle East, and the higher leverage at its joint venture Ventia Pty Ltd., following its proposed acquisition of Broadspectrum Pty Ltd. - However, these transactions, together with a material increase in factoring obligations over the past two to three years, have reduced CIMIC's financial buffer at the current rating level. - On Feb. 20, 2020, S&P Global Ratings affirmed the long- and short-term issuer credit ratings of '###/A-2' on CIMIC. - The stable outlook reflects that on CIMIC's ultimate parent ACS, Actividades de Construccion y Servicios SA (ACS, ###/Stable/A-2), given our view that CIMIC and its immediate parent Hochtief are core subsidiaries of ACS group, and its ratings are equalized with those of the ultimate parent....

Research Update