Fitch Puts Brazilian Builder in Single-B Territory

Fitch has assigned a first-time B+ rating to Brazilian builder Mendes Junior Trading e Engenharia, it says. The company is focused on heavy construction work for the industrial, infrastructure, oil and gas and power generation sectors. It lands in the single-B category due to its moderate business scale and a concentrated backlog on a small set of large projects linked with public sector clients. The agency also finds it lacks the conservative liquidity policy necessary to support a growing business model that relies on relevant working capital needs and is also exposed to the intense volatility inherent to the heavy construction sector. Liquidity is tight, with BRL89m ($44m) in cash reserves at the end of December 2012, covering 0.63x short-term debt. The outlook is stable.