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2010 APR 3 - (VerticalNews.com) -- Fitch Ratings has affirmed Grupo Senda Autotransporte, S.A., de C.V.'s (Grupo Senda) local and foreign currency Issuer Default Ratings (IDRs) and its USD150 million senior secured guaranteed notes due in 2015 at 'B-' and 'B-/RR4', respectively. Fitch also has removed Grupo Senda's ratings from Rating Watch Negative and assigned a Stable Outlook to all ratings.
The rating action results from the turnaround in the company's operating and financial performance beginning in the second half of 2009 (2H'09) as well as the improving business and economic environment in Mexico. Grupo Senda is expected to continue to benefit from the improvement in the Mexican economy, which is expected to grow 4% during 2010 after a contraction of 6.5% during 2009, which should further improve its operational performance and cash flow generation. Higher operating profits over the next several quarters should further reduce the company's still high financial leverage. Recent positive operating trends coupled with improving market conditions have help lower the high refinancing risks faced by the company during late 2008 and the 1H'09.
Grupo Senda's ratings reflect the company's leading market position in the highly competitive and fragmented intercity bus passenger transportation in Mexico, and limited financial flexibility resulting from its high financial leverage and weak liquidity. The ratings also incorporate industry-related risks such as seasonal fluctuations in passengers, cyclicality risk affecting the personnel segment, and volatile fuel costs. Positively, the company benefits from the importance of bus transportation within Mexico that results from income constraints that limit the ability of many people to use more expensive alternative means of transportation such as automobiles or airlines. Grupo Senda is exposed to foreign exchange risks as 90% of its revenues are in Mexican pesos and most of its debt is denominated in U.S. dollars.
The rating action results from the turnaround in the company's operating and financial performance beginning in the second half of 2009 (2H'09) as well as the improving business and economic environment in Mexico. Grupo Senda is expected to continue to benefit from the improvement in the Mexican economy, which is expected to grow 4% during 2010 after a contraction of 6.5% during 2009, which should further improve its operational performance and cash flow generation. Higher operating profits over the next several quarters should further reduce the company's still high financial leverage. Recent positive operating trends coupled with improving market conditions have help lower the high refinancing risks faced by the company during late 2008 and the 1H'09.
Grupo Senda's ratings reflect the company's leading market position in the highly competitive and fragmented intercity bus passenger transportation in Mexico, and limited financial flexibility resulting from its high financial leverage and weak liquidity. The ratings also incorporate industry-related risks such as seasonal fluctuations in passengers, cyclicality risk affecting the personnel segment, and volatile fuel costs. Positively, the company benefits from the importance of bus transportation within Mexico that results from income constraints that limit the ability of many people to use more expensive alternative means of transportation such as automobiles or airlines. Grupo Senda is exposed to foreign exchange risks as 90% of its revenues are in Mexican pesos and most of its debt is denominated in U.S. dollars.
