Homex Cut, Urbi Late on Payment (1)

Fitch has dropped Homex’s ratings to CCC from B, citing poor first quarter 2013 numbers, highlighted by a 38% decline in units sold versus 1Q2012. The second quarter is likely to mean more leverage for the company, says Fitch, adding that government policy pushing vertical housing adds to cash flow is challenging, and that rising inventories haven’t helped, either. Liquidity should “continue to tighten as a result of the investments required to finish construction in progress, further affecting the company’s ability to service its debt,” Fitch says. It remains on rating watch negative. Last week, Moody’s cut Homex’s ratings to B2 from Ba3, citing highly constrained liquidity and funding that leave Homex with a diminished capacity to pay and refinance debt maturities, and to grow its business – despite a recent deal to raise $400m from the sale of prison assets to Carlos Slim companies. Separately, peer Urbi has announced it will miss a $3.9m payment on its 2014 domestic bonds, due Tuesday, and enter a three-day grace period. Urbi was lowered to C by Fitch and Caa2 by Moody’s last week after it missed a payment on its 2016 bonds.