Cimpor Bid Knocks Camargo Rating

Fitch has downgraded the ratings of Brazilian industrial conglomerate Camargo Correa to BB minus from BB after the company announced it had purchased a 22% share in Cimpor for EUR961m. The outlook was revised to stable from negative. “The downgrade reflects the leveraging effect this transaction will have on Camargo’s credit protection measures, which were already weak for the rating category on a net debt basis,” Fitch says. Camargo’s net debt is expected to increase to BRL10.1bn from BRL 7.7.bn on a pro forma basis. Its pro forma net leverage ratio would climb to 3.5x from 2.7x. However, Fitch says the deal allows Camargo to increase its presence in global cement, and it should result in synergies with Camargo’s highly correlated core cement, engineering and construction businesses.