S&P revises Nemak view to stable

S&P said it revised Nemak SAB de CV’s outlook to stable from negative.

“In our previous forecast on Nemak, we estimated debt to EBITDA of about 3.5x in 2020 (versus 2.9x reported as of year-end 2020) based on the potential risk of production volumes falling more drastically in the face of continued lockdowns and economic volatility in the main regions where it operates. However, the industry managed to recover faster than we expected and sales picked up in the second half of last year, and the company avoided further declines in production volumes,” the agency said in a press release.

S&P said it sees Nemak's production volumes will continue climbing as it improves product mix and increases market access in the electric vehicle segment, enabling it to post debt to EBITDA under 2x and free operating cash flow to debt close to 15% while maintaining strong liquidity.

Concurrently, the agency affirmed the long-term global scale BB+ and national scale mxAA- issuer credit ratings. S&P also affirmed Nemak's senior unsecured notes due 2024 and 2025 at BB+ with a 3 recovery rating (55%).

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