Moody’s Fears CIE Refi Risk

Moody’s is reviewing for possible downgrade its B2 corporate family rating on Mexico’s Corporacion Interamericana de Entertenimiento (CIE) owing to a weak liquidity profile and ongoing refinancing risk. “The review for downgrade also considers deterioration in the company’s business prospects due to likely persistent weakness in Mexican consumer disposable income and a possible increasing tax burden caused by efforts of the federal government to boost tax collection, as illustrated by the government’s recent fiscal proposal,” says CIE. As of June 30, CIE’s cash plus marketable securities represented 22% of Moody’s-adjusted short-term debt maturities (which include factoring of accounts receivable and rents), down from 38% in December 2008 and 96% in December 2007. CIE’s scheduled debt maturities during the remainder of 2009 include MXP280m in local CP due in October and MXP500m in certificados bursatiles due in December. “In 2010, the company will continue to face significant debt maturities, including MXP650m in long-term notes (certificados bursatiles) due in April of 2010 and MXP1.4bn in long-term notes (certificados bursatiles) due in October 2010,” says Moody’s.