S&P downgrades Italcementi, notes to BB

Standard & Poor's said it lowered its long-term corporate credit ratings on Italcementi SpA and its core subsidiary, Ciments Francais SA to BB from BB+.

At the same time, the agency affirmed its B short-term ratings on the two companies.

The outlook is stable.

S&P also lowered its issue ratings on the €500 million and €750 million senior unsecured notes issued by Italcementi Finance SA and guaranteed by Italcementi to BB from BB+. The recovery rating remains unchanged at 4, indicating an expectation of average recovery (30%-50%, at the higher end of the range) in the case of a payment default.

In addition, the agency downgraded its issue rating on the €500 million senior unsecured notes due 2017 issued by Ciments Francais to BB from BB+. The recovery rating remains unchanged at 3, indicating an expectation of meaningful recovery (50%-70%, at the higher end of the range) in the case of a payment default.

S&P said the downgrade reflects its view that the Italcementi group's leverage metrics for 2015 will not improve much compared with 2014. As a result, these metrics will be lower than the agency expects at this rating level. This is primarily because conditions in the Italian market remain weak and the French market has continued to contract.

Although prospects in the U.S. and Egypt are better, S&P considers profitability unlikely to make a significant recovery in 2015.

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