Research Update: Elementia S.A.B. de C.V. 'BB-' Ratings Affirmed And Off CreditWatch; Outlook Negative On Recession Risks

Mexican building materials company, Elementia, has successfully strengthened its liquidity in order to navigate through the pandemic. However, construction activity in its key markets remains vulnerable to the recession through the rest of the year. Elementia's current leverage is elevated for the 'BB-' rating; however, we estimate that its asset sales should allow it to reduce its adjusted debt to EBITDA to near 5.0x by year-end 2020, with a gradual deleveraging toward 2021. On Sept. 23, 2020, S&P Global Ratings affirmed its 'BB-' issuer and issue-level credit ratings on Elementia. The recovery rating on the company's senior unsecured notes remains '3'. We removed all ratings from CreditWatch with negative implications because short-term liquidity risks have decreased, coupled with our expectation

...- Mexican building materials company, Elementia, has successfully strengthened its liquidity in order to navigate through the pandemic. However, construction activity in its key markets remains vulnerable to the recession through the rest of the year. - Elementia's current leverage is elevated for the '##-' rating; however, we estimate that its asset sales should allow it to reduce its adjusted debt to EBITDA to near 5.0x by year-end 2020, with a gradual deleveraging toward 2021. - On Sept. 23, 2020, S&P Global Ratings affirmed its '##-' issuer and issue-level credit ratings on Elementia. The recovery rating on the company's senior unsecured notes remains '3'. We removed all ratings from CreditWatch with negative implications because short-term liquidity risks have decreased, coupled with our expectation that the planned spin-off will not materialize in the next few quarters. - The negative outlook reflects our view that Elementia's operating and financial performance remains exposed to...

Research Update