Fitch Ratings has cut Camargo Correa’s credit rating by two notches on concern the increase of its stake in cement company Cimpor has raised the indebtedness of the company too much.
Camargo Correa took over Cimpor earlier this month for EUR1.5bn, and the Brazilian company took on BRL4.24bn (US$2.03bn) of debt to finance the purchase, Fitch wrote.
"Camargo's capital structure was already under pressure from high leverage and poor operational performance in the company's engineering and construction businesses, and this transaction will not allow the company to deleverage to the degree that was previously anticipated by Fitch," the rating company wrote.
The purchase of Cimpor will help Camargo Correa expand its global presence, leading Fitch to label the company's outlook as "stable." (Source: Dow Jones)