Moody's eyes Cimic for downgrade

Moody's Investors Service said it placed the Baa2 issuer rating of Cimic Group Ltd. on review for downgrade. The agency also put the Baa2 backed senior unsecured ratings and (P)Baa2 backed senior unsecured program ratings assigned of Cimic Finance (USA) Pty Ltd. and Cimic Finance Ltd. on review for downgrade. Concurrently, Moody's revised the rating outlook to rating under review from stable.

The action follows the unconditional and final off-market takeover offer by Hochtief AG, through its wholly owned subsidiary Hochtief Australia Holdings Ltd. to acquire the remaining shares of Cimic it does not already own for A$22 per share, the agency said. Hochtief already owns a 78.58% stake in Cimic.

“The review for downgrade reflects the uncertainty regarding Cimic's future business and financial profiles as an unlisted, wholly owned entity of Hochtief AG. The uncertainty is a negative governance consideration under the rating agency's environmental, social and governance (ESG) framework. Moody's views the credit quality of Hochtief AG and its majority owner Actividades de Construccion y Servicios SA (ACS; unrated) to be lower than Cimic's,” the agency said in a press release.

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