Standard & Poor“s Ratings Services said 22 January 2009 that it lowered its long-term corporate credit and senior unsecured debt ratings on Vitro S.A.B. de C.V. to “CC“ from “B-“. At the same tim…
Standard & Poor“s Ratings Services said 22 January 2009 that it lowered its long-term corporate credit and senior unsecured debt ratings on Vitro S.A.B. de C.V. to “CC“ from “B-“. At the same time, it lowered the long-term local scale rating on Vitro to “mxC“ from “mxBB+“. The ratings were removed from CreditWatch Negative, where they were placed on 14 October 2008. The outlook is negative. “The downgrade reflects our expectation that when Vitro reports results for 4Q 2008, it will show liquidity and financial performance is still under pressure. We also expect performance to remain affected during 2009 as a result of the weaker economies in Mexico, the US, and Spain – Vitro“s principal markets”, said Standard & Poor“s credit analyst Marcela Duenas. Margin calls resulting from Vitro“s derivative instrument positions represented an additional drain on its liquidity and raise the likelihood of non-payment of its February coupon (USD 45 million) and other near-term debt obligations. Standard & Poor“s also believes that the 2009 acquisition of a 40% stake in the Spanish joint venture Cristalglass, valued at EUR 31 million, may require additional cash flow. During the final quarter of 2008, the company made a partial payment of EUR 4 million. Vitro“s 2009 sales will be hurt by brewer Grupo Modelo“s recent announcement that it will reduce its orders for Vitro“s glass bottles by approximately 90%, cutting Vitro“s consolidated sales by 6.9% for 2009. The company has indicated that it is negotiating to find common solutions that minimize the impact. The outlook is negative and indicates a high degree of uncertainty regarding the company“s ability to meet its short-term obligations, particularly those due in February 2009. Longer-term, the negative outlook also reflects Standard & Poor“s expectations that the company will depend on its ability to raise additional debt to meet its financial obligations in a very challenging credit environment.