Moody's lifts HeidelbergCement from junk

Moody's Investors Service said it upgraded HeidelbergCement AG's issuer rating and senior unsecured bank credit facility to Baa3 from Ba1, its short-term rating to Prime-3 from Not Prime and the senior unsecured bonds of HeidelbergCement and Heidelbergcement Finance BV to Baa3 from Ba1.

This concludes the review for possible upgrade begun in August 2006, and the outlook is stable.

The agency said the upgrade acknowledges the continued very positive trend shown in the company's operating performance and financial metrics during the last years due to continuous revenue growth in the company's European, Asian and North American core markets, the successful implementation of several cost-cutting measures and a prudent cash flow management.

Moody's commented that the current business profile and leverage of HeidelbergCement could warrant a higher rating than Baa3, but the company's reliance on short-term, uncommitted bank facilities and on the less transparent eventual liquidity support available from its main shareholder continue to weigh on the ratings.

Uncertainty about the company's refinancing plans for a €1 billion bond maturing in February had remained an obstacle for a rating upgrade since the company was put under review in August 2006 because existing committed and reliable credit lines could not fully cover short liquidity needs. The agency said that although this bond has been refinanced via increased utilization of HeidelbergCement's commercial paper program and the utilization of weak short-term bilateral bank lines, this short-term refinancing continues to negatively impact the group's overall ratings.

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