S&P Raises Xignux to BB+ Plus

S&P has upped its corporate credit rating on Xignux, the Mexican diversified holding company, to BB+ (stable) from BB and raised its 2009 notes to BB from BB-. “The rating action reflects an improvement in the issuer’s financial profile supported by better-than-expected financial performance during 2007,” says S&P analyst Jose Coballasi. “In addition, the rating action considers that the prospects for the power transformers business will remain favorable and will continue to drive strong results in 2008 and 2009.” The rating on the 2009s reflects the structural subordination of the issue relative to the company’s priority liabilities. Xignux is constrained by the cyclical nature of most of its end markets as well as commodity price volatility and single-digit operating margins. “The ratings also consider Xignux’s significant market share positions, product diversity, and vertical integration,” says S&P. The firm is committed to maintaining a total debt-to-EBITDA ratio of less than 2.5x through the cycle.