Moody's changes Brookfield outlook to negative

Moody's America Latina said it revised the outlook for Brookfield Incorporacoes SA to negative from stable and affirmed its corporate family rating and R$300 million senior debentures due in 2015 and 2016 at Ba3 on the global scale and at A3.br on the national scale.

The agency said the change in outlook to negative reflects the company's lower-than-expected operating results during the first half of 2013 leading to higher leverage, tighter liquidity and overall weaker credit metrics, which could take time to improve given the current challenging business environment for homebuilders in Brazil.

The Ba3 rating continues to reflect Brookfield's position among the top five largest homebuilders in Brazil, its adequate corporate governance standards and the benefit of having Brookfield Asset Management Inc. (Baa2/ stable) as its largest individual shareholder, the agency said.

On the other hand, Brookfield's high leverage and ongoing execution risks constrain the ratings, as does the sizeable land bank, which is not entirely suitable for its current business strategy, and its relatively tight liquidity position, Moody's said.

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