(The following statement was released by the rating agency)
March 14 - Fitch Ratings has affirmed Corporacion Geo, S.A.B. de C.V.’s (GEO) ratings as follows:
--Foreign Currency Issuer Default Rating (IDR) at ‘BB-';
--Local Currency IDR at ‘BB-';
--National Long-term rating at ‘A-(Mex)';
--USD250 million senior notes due 2014 at ‘BB-';
--USD250 million senior notes due 2020 at ‘BB-';
--MXN400 million Certificados Bursatiles due 2014 at ‘A-(Mex)'.
Fitch Ratings has also assigned an expected ‘BB-(exp)’ rating to GEO’s proposed issuance of up to USD400 million in notes due in 2022. Proceeds from the issuance will be entirely used to refinance debt. The proposed transaction will provide the proceeds to fund GEO’s recently announced tender offer and consent solicitation for any and all of its outstanding USD250 million senior notes due in 2014. The final rating for the proposed USD400 million senior notes is contingent upon the receipt of final documents conforming to information already received.
The Rating Outlook is Stable.
The ratings reflect GEO’s solid market position in the Mexican homebuilding industry, consistent business strategy oriented to the affiliated low-income housing segment, geographic diversification and reasonable land reserve using different acquisition schemes, adequate liquidity, and moderate leverage. The ratings factor in GEO’s solid market share position in the sector, being the largest homebuilder in Mexico with 57,865 units sold during 2011. The ratings are constrained by GEO’s high working capital requirements related to its operations, and limited capacity to generate positive free cash flow (FCF) in the short to medium term.