Empresas ICA SAB (ICA*)’s credit rating was cut one level by Moody’s Investors Service amid declining earnings at Mexico’s largest construction company and delays in public-works spending by President Enrique Pena Nieto.
The Mexico City-based builder’s corporate-family rating was lowered to B2, or five levels below investment grade, from B1. Moody’s said it may lower the rating further.
Revenue in the construction unit fell 41 percent in the first quarter from a year earlier and the backlog of contracts dropped 7 percent from Dec. 31, ICA said last month. Earnings before interest, taxes, depreciation and amortization slid 21 percent to 1.11 billion pesos ($90 million), the lowest level in two years.
“The downgrade on ICA’s ratings was based on the company’s weaker-than-expected credit metrics, especially the very high leverage and modest interest coverage, as well as its weak liquidity,” Nymia Almeida, a Moody’s analyst, said in a report.
The new government, which took office in December, has yet to announce detailed infrastructure spending plans and has been slow to award new projects, Moody’s said.
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