NEW YORK, Jul 30, 2015 (BUSINESS WIRE) --
Fitch has affirmed the Issuer Default ratings of IRSA Propiedades
Comerciales S.A. (IRCP), Inversiones y Representaciones S.A. (IRSA); and
Cresud S.A.C.I.F. y A. (Cresud),
Fitch has affirmed the following ratings of IRSA Propiedades Comerciales
S.A. (IRCP):
--Local currency Issuer Default Rating (IDR) at 'B+'; Outlook Negative;
--Foreign currency IDR at 'CCC';
--USD120 million senior unsecured notes due in 2017 at 'B-/RR3'.
IRCP's ratings reflect the company's exposure to Argentina's business
climate and economic conditions, its credit profile, and the credit
linkage with its parent company, IRSA. The Negative Outlooks on IRCP's
LC IDR reflects the high degree of uncertainty about the business
climate and economic conditions.
KEY RATING DRIVERS
IRCP's foreign currency (FC) IDR continues to be constrained at 'CCC' by
the 'CCC' country ceiling assigned to Argentina by Fitch. The company's
local currency (LC) IDR remains at 'B+' due to the high risk of
operating in Argentina's real estate industry. The 'RR3' Recovery Rating
reflects above average recovery prospects in the event of default. The
notching above the soft cap of 'RR4' for bonds issued by Argentine
corporates reflects the company's very strong credit profile.
IRCP's leverage is low for a real estate company. During the last twelve
months ended March 31, 2015 (LTM March 2015), the company's leverage has
increased to 2.7x from 1.1x. The increase in debt is primarily due to a
new related-party transaction that the company entered with its parent
company, IRSA. The company's ratings continue to be linked with IRSA's,
which owns 95.7% of IRCP. As of March 31, 2015, IRSA had USD530 million
of total consolidated debt, resulting in a total net debt-to-EBITDA
ratio of 1.7x.
KEY ASSUMPTIONS
--EBITDA margin for full-year 2015 around 80%
--Total adjusted net leverage for full-year 2015 around 3x
RATING SENSITIVITIES
The ratings are expected to be driven primarily by developments in
Argentina's business climate and economic conditions.
LIQUIDITY
IRCP's short-term debt has increased during the LTM period ended March
2015, which adds some pressure to its liquidity' however, this situation
is partially counterbalanced by the company's cash flow generation and
access to short-term credit with local banks. The company's debt payment
schedule includes USD75 million during the next 12 months ended March
2016, while it had USD10 million of cash at the end of March 2015. In
addition, IRCP's portfolio of assets is strong, and is primarily
unencumbered and provides an additional source of liquidity.
Fitch has also affirmed the following ratings of IRSA:
--Local Currency IDR at 'B+';
--Foreign Currency Issuer Default Rating (IDR) at 'CCC';
--USD150 million Senior Unsecured Notes due in 2017 at 'B-/RR3';
--USD150 million Senior Unsecured Notes due in 2020 at 'B-/RR3';
--The Rating Outlook for the Local Currency IDR remains Negative.
IRSA's ratings reflect the company's exposure to Argentina's business
climate and economic conditions as well as its consolidated credit
profile. The Negative Outlooks on IRSA reflects the high degree of
uncertainty about the business climate and economic conditions in
Argentina.
KEY RATING DRIVERS
IRSA's FC IDR is constrained at 'CCC' by Argentina's 'CCC' country
ceiling. The company's LC IDR is 'B+', which reflects a strong position
in the local market and an easier access to financing.in Argentine peso.
Both IRSA and its subsidiary, IRCP, own key parcels of land in strategic
areas of Buenos Aires, which could be sold to improve the company's
liquidity or for new developments. The LC IDRs of IRSA and IRCP have
been linked at 'B+'. This linkage reflects factors that align the credit
quality of these companies, as well as the fact IRCP's upstream
dividends represent a relevant part of IRSA's cash flow generation.
IRSA has a leading position in the Buenos Aires shopping center segment
through PCSA. The shopping center segment accounts for about 75% of
IRSA's consolidated operating EBITDA. The company is also the leader in
the development and management of office buildings in Buenos Aires.
IRSA maintains moderate levels of debt, as well as a manageable
liquidity position. Its main source of financing is with local banks,
which is done primarily on a short-term basis. The company has a high
level of unencumbered assets and land that could be sold to enhance
liquidity and to service debt.
KEY ASSUMPTIONS
--EBITDA margin for full-year 2015 around 75%
--Total adjusted net leverage for full-year 2015 around 2x
LIQUIDITY
As of March 31, 2015, IRSA had USD530 million of total consolidated
debt, resulting in a total net debt-to-EBITDA ratio of 1.7x. IRSA is
expected to meet its upcoming debt obligations during the next 12-month
period ended in March 2016 with a mix of cash from operations and the
rollover of existing debt. The company main challenge remains the
refinancing of its unsecured notes of USD150 million due in 2017.
RATING SENSITIVITIES
The ratings are expected to be driven primarily by the development of
the Argentina's business climate and economic conditions.
Fitch has also affirmed the ratings of Cresud S.A.C.I.F. y A. (Cresud)
as follows:
--Local Currency IDR at 'B-';
--Foreign Currency Issuer Default Rating (IDR) at 'CCC';
--The Rating Outlook for the Local Currency IDR remains Negative.
Cresud's ratings reflect the company's exposure to Argentina's business
climate and economic conditions and its leading business position in the
real estate and agribusiness sectors. The Negative Outlook reflects the
high degree of uncertainty about the business climate and economic
conditions in Argentina.
RATING DRIVERS
Cresud's FC IDR is constrained at 'CCC' by the 'CCC' country ceiling
assigned to Argentina by Fitch. Cresud's 'B-' LC IDR is held back by
above-average risks associated with operating in the Argentinian real
estate segment and the volatile cash flow of its agribusiness division,
which is subject to weather conditions and commodity prices.
Fitch links the ratings of Cresud and IRSA. Cresud's 'B-' LC IDR is
notched down from IRSA's 'B+' LC IDR because of the structural
subordination of its debt and weaker stand-alone financial profile. This
also incorporates factors such as strong strategic and operational ties
with IRSA, which represents a significant part of Cresud's cash flow
from operations.
Cresud's ratings consider its position as a leading company in the real
estate and agribusiness sectors in Argentina. Cresud owns 64.5% of IRSA,
a leading real estate company in Argentina dedicated to real estate
development, office rentals, and shopping mall operations through IRCP.
Cresud has farms in Argentina and a presence in Bolivia, Paraguay, and
Brazil.
KEY ASSUMPTIONS
--EBITDA margin for full-year 2015 around 30%
--Total adjusted net leverage for full-year 2015 around 5.5x
LIQUIDITY
The ratings also reflect moderate consolidated leverage, as well as
manageable liquidity from unencumbered assets and sellable land. These
assets provide Cresud, and its direct and indirect subsidiaries, with
financial flexibility.
RATING SENSITIVITIES
The ratings are expected to be driven primarily by positive developments
in Argentina's business climate and economic conditions.
Additional information is available on www.fitchratings.com
Applicable Criteria
Corporate Rating Methodology - Including Short-Term Ratings and Parent
and Subsidiary Linkage (pub. 28 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=988814
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988814
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2detail=31
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SOURCE: Fitch Ratings
Fitch Ratings
Primary Analyst
Jose Vertiz, +1-212-908-0641
Director
Fitch
Ratings, Inc.
33 Whitehall Street,
New York, NY 10004
or
Secondary
Analyst
Dan Kastholm, CFA, +1-312-368-2070
Managing Director
or
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Chairperson
Joe Bormann, CFA, +1-312-368-3340
Managing Director
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