Mexico Bus Company Clipped

Fitch has cut Mexico’s Grupo Senda’s ratings and placed them on rating watch negative. The agency downgraded Senda’s foreign and local currency IDRs to B minus from B+. It also downgraded to B minus/RR4 from B+/RR4 the rating on $150m senior secured guaranteed notes. The cut reflects the transportation company’s increased leverage as a result of lower profitability coupled with the MXP devaluation against the USD, as well as the challenging operating environment the company faces in the near term, Fitch says. It implies 31%-50% recovery in the event of default. As of December 31, the company had cash and equivalents of MXP191m and short-term debt of MXP372m, from which approximately MXP201m are revolving bank credit facilities and the rest are maturities of long-term debt, says Fitch. Grupo Senda relies on successfully rolling over short-term debt given the current pressure on its cash flow generation, it adds. Senda specializes in bus transportation and package delivery services.