Moody's rates Vitro notes

Moody's Investors Service said it assigned ratings for the first time to the debt of Vitro Envases Norteamerica SA de CV, a wholly owned subsidiary of Vitro SA de CV (senior implied rating of B1 with a negative outlook).

Moody's assigned a B2 rating to Vitro Envases's proposed $150 million senior secured guaranteed notes due 2014, a B2 senior implied rating and a Caa1 senior unsecured issuer rating.

Moody's said the ratings reflect Vitro Envases's weak financial position on a stand-alone basis and its vulnerabilities to foreign exchange fluctuations, conversion of products away from glass, seasonality and rising natural gas costs.

The outlook is stable.

In Moody's opinion, the risk of cash leakage out of Vitro Envases up to Vitro and its subsidiaries constrains the ratings. Additionally, the ratings reflect Vitro Envases's susceptibility to macroeconomic factors.

Moody's said the ratings also incorporate weak coverage of pro forma interest expense (EBITDA less capital expenditures covers interest expense around 1.5x) and high financial leverage with pro forma adjusted debt to EBIT over 10x (adjusted debt to EBITDA slightly less then 4x).

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