Agencies Flag Vitro Default Risk

Moody’s has downgraded Vitro to Caa1 from B2, and keeps it on review for possible further downgrade, highlighting elevated risk of default, while Fitch cut it to B minus (watch negative) from B. “The downgrade reflects Moody’s belief that Vitro’s liquidity and financial flexibility have further weakened in light of derivative exposure, low unrestricted cash reserves and increasing reliance on short-term debt amid uncertain credit market conditions and deteriorating economic fundamentals,” says Moody’s. Its review will focus on the extent to which margin calls and derivative related liabilities will affect Vitro’s financial position, as well as the feasibility and effectiveness of the measures the company is undertaking to meet near term cash requirements and to restore financial flexibility. Vitro is Mexico’s leading glass manufacturer with revenues of $2.7bn for the 12 months ended September 30, says Moody’s. It has the following bonds outstanding $300m due 2012, $225 due 2013, and $700m due 2017.