Moody’s drops Obrascon Huarte, debt to Caa1

Moody's Investors Service said it downgraded Obrascon Huarte Lain SA’s corporate family rating and senior unsecured debt instrument ratings to Caa1 from B3.

Concurrently, the agency downgraded the probability of default rating to Caa1-PD from B3-PD.

The outlook is negative.

"The downgrade is primarily driven by a further slump in earnings of OHL's core Engineering and Construction businesses in 3Q 2016 following a significant decline in the previous four quarters that translated into material negative free cash flow generation and rising recourse debt levels. This development is against a previously expected gradual recovery over H2 2016 and beyond, and will prevent any improvement of gross recourse-leverage within the next 12-18 months to levels of below 7.5x, which we had expected for the previous rating level," Moody's vice president, senior analyst Matthias Heck said in a news release.

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