Moody“s Investors Service changed to negative from stable the ratings outlook for Vitro, S.A. de C.V. and subsidiaries, of Mexico. Approximately US$ 425 million of debt securities will be affected.
…
Moody“s Investors Service changed to negative from stable the ratings outlook for Vitro, S.A. de C.V. and subsidiaries, of Mexico. Approximately US$ 425 million of debt securities will be affected. Moody“s confirmed the Ba3 rating of the US$ 250 million 11 3/8% senior unsecured notes, due 2007, and the US$ 175 million 10 1/4% senior unsecured notes, due 2002, issued by Vicap, S.A. de C.V. (“Vicap”), a wholly owned subsidiary of Vitro and its financing vehicle in Mexico. Vitro“s senior unsecured issuer rating is Ba3. The senior implied rating is Ba2. The ratings reflect Vitro“s moderate profitability, modest retained cash as a percentage of total debt and weak coverage of interest expense, Moody“s said. The continued effects of a strong Mexican Peso, higher natural gas prices (a principal component of operating costs) and significant domestic price competition are pressuring margins. Financial leverage exceeds Moody“s expectations, and there is some concern regarding the continuation of Vitro“s stock repurchase programme while debt levels remain relatively aggressive. Moody“s acknowledged “the company“s efforts to curtail capital spending, to improve working capital management, and to enhance efficiencies through reduced operating costs and targeted dispositions.” The negative ratings outlook expresses Moody“s concerns regarding sequential gross and operating margin compression (from the latter part of 1999 and continuing to date) and the absence of material de-leveraging.