Moody’s cuts Elementia

Moody’s Investors Service said it downgraded Elementia SAB de CV’s corporate family rating to Ba3 from Ba2.

“The downgrade of Elementia’s CFR to Ba3 was mainly prompted by the impacts of the coronavirus outbreak in Mexico’s economy and our expectation of a slow recovery through 2021. Close to 65% of Elementia’s EBITDA comes from Mexico, where the disruption in supply chains, the sharp decline in demand from the U.S., and the domestic impact of quarantine measures will result in a profound economic recession,” said Moody’s in a press release.

The agency changed the outlook to negative from stable.

“The negative outlook reflects our view that there are significant downside risks to our forecasts related to both longer-than anticipated lockdowns in the U.S. and Mexico or due to a rebound in the outbreak before the end of 2021. As a result, cash burn could continue to be high, resulting in a stressed liquidity situation amid restricted sources of alternate liquidity,” Moody’s said.

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