Moody’s Negative on CIE

Moody’s has chopped Mexico’s CIE to B2 from Ba3 and to Ba1.mx from A3.mx, citing weak liquidity, high refinancing risk and low free cashflow visibility. The outlook on the ratings is negative. “As of September 30, 2008, cash on hand plus marketable securities represented only 47% of adjusted short term debt maturities (which includes adjustments for factoring of accounts receivable and operating leases), down from 63% in June 2008 and 98% in December 2007. In addition, free cashflow has been negative, mostly because of high working capital needs,” Moody’s notes. It adds that the company has maturities coming up soon. They include MXP80m in local CP due in March, MXP280m in local notes due in April, MXP500m in local notes due in December and MXP650m in local notes due April 2010. The company also has MXP1.4bn in local notes maturing in October next year.