Grupo Collado’s credit rating downgraded by S&P

Monday, 02 September 2013 01:47:26 (GMT+3)   |  
       

Standard & Poor's said that it lowered the credit rating of the bank debt and long-term stock of Mexican steel distributor and transformer Grupo Collado to "mxB" of "mxBB-" and maintained its "negative" outlook.

"The ratings downgrade reflects our view of Grupo Collado that despite some improvements in the second quarter of this year, there is greater uncertainty about the company's ability to meet its financial obligations, especially in 2014 when principal payments will add about 140 million pesos," S&P said in a statement.

Among the risks looming for Grupo Collado include volatility in steel prices, which affect the overall profitability of the industry-low operating margins and high competition in the Mexican market.

"In our opinion, the steel industry will continue to face a negative scenario due to lower steel prices, overcapacity and low demand worldwide, which will continue to pressure operating margins," said S&P.

Further, expectations about the condition of some of the major end-markets in which Grupo Collado participates, such as the construction sector, continue to be unfavorable.

S&P expects sales of Grupo Collado will mainly affected by low steel prices since their operating margins remain weak.