LONDON (AFX) - Standard & Poor's Ratings Services said it has cut its outlook on France's largest property company Gecina to negative from stable, reflecting uncertainties about the ability of the Metrovacesa group, to reach adequate credit metrics in the near to medium term, in the context of two pending bids on part of Metrovacesa's capital.
Metrovacesa (not rated) currently owns 68.5 pct of Gecina.
At the same time, S&P affirmed its 'BBB-/A-3' corporate credit ratings on Gecina.
'The negative outlook reflects our concerns that Metrovacesa's credit measures could fall short of acceptable levels for the current rating in 2006,' said S&P credit analyst Xavier Buffon.
In addition, if, as a result of the current offers on Metrovacesa, any shareholder significantly increases its holding and, in doing so, takes on a substantial amount of debt, S&P would take this into consideration in setting minimal acceptable ratios to maintain the rating.
'While we would not necessarily consolidate a shareholder's debt back into our ratios, depending on the ultimate stakes in the capital, we could nevertheless become more demanding as regards credit measures,' said Buffon. In this case, reaching adequate credit ratios in 2006 could become even more challenging.
The ratings on Gecina are capped by S&P's credit assessment of Metrovacesa.
It said the combined group has a satisfactory business profile and aggressive financial profile. Its assessment of the consolidated group reflects the combination of: Gecina's standalone credit profile, which it said continues to be stronger than the group's, and a more aggressive risk profile at the parent Metrovacesa, including high debt leverage and heavy involvement in for-sale as well as to-let development activities. newsdesk@afxnews.com jsa/jfr COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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