Moody's affirms GEO

Moody's de Mexico said it affirmed Corporacion GEO SAB de CV's senior unsecured debt rating at Ba3, long-term local-currency issuer rating at Ba3, national-scale rating at A3.mx and short-term local-currency issuer rating at Not Prime.

The outlook is stable and reflects the expectation that GEO will continue to grow its sales volume while at least maintaining its current credit metrics.

Over the past two years GEO has made progress in reducing its exposure to short-term debt and improving its financial flexibility while continuing to drive growth in sales volume and expand its platform, the agency said.

The ratings consider the high upfront capital costs in getting the first factories fully operational, which has resulted in negative free cash flow for the past two years, the agency added. Moody's said it expects 2011 to be free cash flow neutral to slightly positive as the first factory should produce 10,500 homes.

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