Fitch Ratings says the 2009 credit outlook for European building materials (EBM) companies is Negative, as ongoing difficult trading conditions in some key markets are likely to affect operating cash flows. This would put pressure on ratings, at a time when headroom is limited following recent acquisition activity.
De-leveraging will be challenging in 2009 and Fitch believes that issuers which are reliant on divestments to reduce their debt levels - such as HeidelbergCement AG (HC, ’BB-’(BB minus)/ ’B’/Rating Watch Negative) and Lafarge (’BBB’/’F3’/Rating Watch Negative) - are likely to continue facing adverse M&A markets due to a persistent tight credit environment.
"Measures announced so far by issuers may prove to be insufficient to defend their credit profiles, in light of the rapidly worsening market conditions," says Elisabetta Zorzi, Senior Director in Fitch’s European Corporates group.
Fitch says any further negative actions are likely to be limited to single-notch downgrades, following several negative rating actions on EBM issuers in 2008.