CAP On CreditWatch Negative

S&P has placed Chile-based CAP’s BBB minus ratings on credit watch negative as it expects significant deterioration in its financial risk profile because of lower cashflow generation as sales drop amid the global economic slowdown. “We expect that weaker cashflow generation and financial ratios could potentially reduce the company’s high cash position of $381m as of March 31,” S&P says. It adds that this would result if the ferrous metal company is not able to internally finance capex and dividends, and if it breaches certain financial covenants included in the terms and conditions of a $150m outstanding bank loan, which could potentially trigger early repayment.