Fitch downgrades Grupo Aldesa

Fitch Ratings said it downgraded Grupo Aldesa SA's long-term issuer default rating to B- from B.

The outlook is stable.

Fitch also said it downgraded wholly owned subsidiary, Aldesa Financial Services SA's senior secured rating to B- with recovery rating of RR4 from B with recovery rating of RR4.

The downgrades reflect an expectation that Aldesa's funds from operations adjusted net leverage metric will remain higher than the negative sensitivity of 6x in the medium term, the agency said.

Fitch also said it factors in an expectation that the company's free cash flow margin will turn negative, which is not commensurate with the B rating median.

Although Aldesa's business profile is considered in line with the B rating median, medium-term weakness in the company's financial structure and increased refinancing risks drive a weaker credit profile, the agency said.

Although Aldesa's current liquidity is sufficient in the short-term, the company faces significant refinancing risk in the next two years while market sentiment is likely to remain negative over southern European construction companies, Fitch said.

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