Fitch has affirmed the Issuer Default ratings of IRSA
Propiedades Comerciales S.A. (IRCP), Inversiones y Representaciones
S.A. (IRSA); and Cresud S.A.C.I.F. y A. (Cresud),
Fitch has affirmed the following ratings of IRSA Propiedades
Comerciales S.A. (IRCP):
--Local currency Issuer Default Rating (IDR) at 'B+'; Outlook
Negative;
--Foreign currency IDR at 'CCC';
--USD120 million senior unsecured notes due in 2017 at
'B-/RR3'.
IRCP's ratings reflect the company's exposure to Argentina's
business climate and economic conditions, its credit profile, and
the credit linkage with its parent company, IRSA. The Negative
Outlooks on IRCP's LC IDR reflects the high degree of uncertainty
about the business climate and economic conditions.
KEY RATING DRIVERS
IRCP's foreign currency (FC) IDR continues to be constrained at
'CCC' by the 'CCC' country ceiling assigned to Argentina by Fitch.
The company's local currency (LC) IDR remains at 'B+' due to the
high risk of operating in Argentina's real estate industry. The
'RR3' Recovery Rating reflects above average recovery prospects in
the event of default. The notching above the soft cap of 'RR4' for
bonds issued by Argentine corporates reflects the company's very
strong credit profile.
IRCP's leverage is low for a real estate company. During the
last twelve months ended March 31, 2015 (LTM March 2015), the
company's leverage has increased to 2.7x from 1.1x. The increase in
debt is primarily due to a new related-party transaction that the
company entered with its parent company, IRSA. The company's
ratings continue to be linked with IRSA's, which owns 95.7% of
IRCP. As of March 31, 2015, IRSA had USD530 million of total
consolidated debt, resulting in a total net debt-to-EBITDA ratio of
1.7x.
KEY ASSUMPTIONS
--EBITDA margin for full-year 2015 around 80%
--Total adjusted net leverage for full-year 2015 around 3x
RATING SENSITIVITIES
The ratings are expected to be driven primarily by developments
in Argentina's business climate and economic conditions.
LIQUIDITY
IRCP's short-term debt has increased during the LTM period ended
March 2015, which adds some pressure to its liquidity' however,
this situation is partially counterbalanced by the company's cash
flow generation and access to short-term credit with local banks.
The company's debt payment schedule includes USD75 million during
the next 12 months ended March 2016, while it had USD10 million of
cash at the end of March 2015. In addition, IRCP's portfolio of
assets is strong, and is primarily unencumbered and provides an
additional source of liquidity.
Fitch has also affirmed the following ratings of IRSA:
--Local Currency IDR at 'B+';
--Foreign Currency Issuer Default Rating (IDR) at 'CCC';
--USD150 million Senior Unsecured Notes due in 2017 at
'B-/RR3';
--USD150 million Senior Unsecured Notes due in 2020 at
'B-/RR3';
--The Rating Outlook for the Local Currency IDR remains
Negative.
IRSA's ratings reflect the company's exposure to Argentina's
business climate and economic conditions as well as its
consolidated credit profile. The Negative Outlooks on IRSA reflects
the high degree of uncertainty about the business climate and
economic conditions in Argentina.
KEY RATING DRIVERS
IRSA's FC IDR is constrained at 'CCC' by Argentina's 'CCC'
country ceiling. The company's LC IDR is 'B+', which reflects a
strong position in the local market and an easier access to
financing.in Argentine peso.
Both IRSA and its subsidiary, IRCP, own key parcels of land in
strategic areas of Buenos Aires, which could be sold to improve the
company's liquidity or for new developments. The LC IDRs of IRSA
and IRCP have been linked at 'B+'. This linkage reflects factors
that align the credit quality of these companies, as well as the
fact IRCP's upstream dividends represent a relevant part of IRSA's
cash flow generation.
IRSA has a leading position in the Buenos Aires shopping center
segment through PCSA. The shopping center segment accounts for
about 75% of IRSA's consolidated operating EBITDA. The company is
also the leader in the development and management of office
buildings in Buenos Aires.
IRSA maintains moderate levels of debt, as well as a manageable
liquidity position. Its main source of financing is with local
banks, which is done primarily on a short-term basis. The company
has a high level of unencumbered assets and land that could be sold
to enhance liquidity and to service debt.
KEY ASSUMPTIONS
--EBITDA margin for full-year 2015 around 75%
--Total adjusted net leverage for full-year 2015 around 2x
LIQUIDITY
As of March 31, 2015, IRSA had USD530 million of total
consolidated debt, resulting in a total net debt-to-EBITDA ratio of
1.7x. IRSA is expected to meet its upcoming debt obligations during
the next 12-month period ended in March 2016 with a mix of cash
from operations and the rollover of existing debt. The company main
challenge remains the refinancing of its unsecured notes of USD150
million due in 2017.
RATING SENSITIVITIES
The ratings are expected to be driven primarily by the
development of the Argentina's business climate and economic
conditions.
Fitch has also affirmed the ratings of Cresud S.A.C.I.F. y A.
(Cresud) as follows:
--Local Currency IDR at 'B-';
--Foreign Currency Issuer Default Rating (IDR) at 'CCC';
--The Rating Outlook for the Local Currency IDR remains
Negative.
Cresud's ratings reflect the company's exposure to Argentina's
business climate and economic conditions and its leading business
position in the real estate and agribusiness sectors. The Negative
Outlook reflects the high degree of uncertainty about the business
climate and economic conditions in Argentina.
RATING DRIVERS
Cresud's FC IDR is constrained at 'CCC' by the 'CCC' country
ceiling assigned to Argentina by Fitch. Cresud's 'B-' LC IDR is
held back by above-average risks associated with operating in the
Argentinian real estate segment and the volatile cash flow of its
agribusiness division, which is subject to weather conditions and
commodity prices.
Fitch links the ratings of Cresud and IRSA. Cresud's 'B-' LC IDR
is notched down from IRSA's 'B+' LC IDR because of the structural
subordination of its debt and weaker stand-alone financial profile.
This also incorporates factors such as strong strategic and
operational ties with IRSA, which represents a significant part of
Cresud's cash flow from operations.
Cresud's ratings consider its position as a leading company in
the real estate and agribusiness sectors in Argentina. Cresud owns
64.5% of IRSA, a leading real estate company in Argentina dedicated
to real estate development, office rentals, and shopping mall
operations through IRCP. Cresud has farms in Argentina and a
presence in Bolivia, Paraguay, and Brazil.
KEY ASSUMPTIONS
--EBITDA margin for full-year 2015 around 30%
--Total adjusted net leverage for full-year 2015 around 5.5x
LIQUIDITY
The ratings also reflect moderate consolidated leverage, as well
as manageable liquidity from unencumbered assets and sellable land.
These assets provide Cresud, and its direct and indirect
subsidiaries, with financial flexibility.
RATING SENSITIVITIES
The ratings are expected to be driven primarily by positive
developments in Argentina's business climate and economic
conditions.
Additional information is available on www.fitchratings.com
Applicable Criteria
Corporate Rating Methodology - Including Short-Term Ratings and
Parent and Subsidiary Linkage (pub. 28 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393
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https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988814
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version on businesswire.com: http://www.businesswire.com/news/home/20150730006776/en/
Fitch RatingsPrimary AnalystJose Vertiz,
+1-212-908-0641DirectorFitch Ratings, Inc.33 Whitehall Street,New
York, NY 10004orSecondary AnalystDan Kastholm, CFA,
+1-312-368-2070Managing DirectororCommittee ChairpersonJoe Bormann,
CFA, +1-312-368-3340Managing DirectororMedia RelationsAlyssa
Castelli, +1-212-908-0540alyssa.castelli@fitchratings.com