Standard & Poor’s cut its credit rating for Cemex to junk status Wednesday, citing expectations that deterioration in key markets will hurt its cash flow.
In its second downgrade in three months, S&P lowered Cemex’s rating to ’BB+’ from ’BBB-’, and said the rating could be lowered further or affirmed following a review. S&P also cut Cemex’s perpetual bonds rating to ’BB’ from ’BB+’.
"The rating downgrades reflect our expectations that Cemex’s financial performance for 2009 will be under further pressure given the weakening of economic growth prospects in Cemex’s principal markets and around the world," S&P said, noting expectations of contractions in the U.S., Mexico and Spain.
S&P said that although Cemex has managed to refinance 60% of its debt maturing this year, and creditors waived certain leverage ratio covenants, "we believe that maturities in 2009 will still be relatively high compared with Cemex’s expected cash flow generation and cash position."