The ratings on Leighton Holdings Ltd. reflects the company's strong stand-alone business position, as Australia's largest construction and contract-mining group; its sector, geographic, and project diversity across Australia and Asia; its consistent operating performance; its strong order book, supported by a robust financial profile; and the positive prospects for the Australian engineering and construction (E&C) sector. The ratings are, however, constrained by Leighton's exposure to the weaker credit profile of its major shareholder, Germany-based Hochtief AG (not rated) and the potential influence this parent could exert on Leighton's financial policies; the volatility associated with its operations in emerging markets; and the sizable performance obligations involved in large construction and mining projects. Hochtief's creditworthiness is weaker than Leighton's, and deteriorated further
