S&P affirms Mexichem

Standard & Poor's said it affirmed its BBB- global scale and mxAA/mxA-1+ national scale corporate credit ratings on Mexichem SAB de CV. The outlooks remain stable.

The agency said the affirmation followed Mexichem's announcement of an agreement to acquire Wavin NV for about $1 billion including assumed debt.

"In our view, the combination of positives results in Mexichem's higher-than-peers' operating margins and solid key financial metrics," said S&P credit analyst Francisco Gutierrez in a news release. "However, we limit our ratings on the company by the negative free operating cash flow generation that has resulted from its acquisitions, the concentration of revenues in Mexico, Brazil, and Colombia, and some exposure to price volatility for some raw materials."

In S&P's view, the agency said, Mexichem will likely maintain its "satisfactory" business profile in the coming years through the full integration of its recent acquisition and investments into existing operations.

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