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Rating Action:

Moody's downgrades Urbi's senior unsecured debt ratings to Ca.mx, ratings remain under review for downgrade

Global Credit Research - 07 May 2013

Mexico, May 07, 2013 -- Moody's de Mexico downgraded Urbi Desarrollos Urbanos, S.A.B. de C.V.'s ("Urbi") national scale Certificados Bursatiles program rating to Ca.mx, from Caa2.mx (global scale local currency rating to (P)Ca from (P)Caa2), its national scale senior unsecured debt rating to Ca.mx, from Caa2.mx (global scale local currency rating to Ca from Caa2) and its corporate family rating to Ca from Caa2. These ratings remain under review for downgrade. Urbi's commercial paper program on the national scale was affirmed at MX-4 (global scale local currency commercial paper program rating affirmed at Not Prime).

RATINGS RATIONALE

This rating action follows Urbi's failure to make the $3.9 million pesos interest payment of its 2014 local bonds (URBI 11) within the required three business day grace period, which expired on May 6th. This constitutes an event of default under the bond indenture and triggers a payment acceleration of not only the local bond, but would likely trigger an event of default and an acceleration of the company's remaining debt, placing a large burden on the company's already feeble liquidity position and viability. The Ca rating implies a diminished recovery to bondholders and other stakeholders.

In its review Moody's will monitor Urbi's ability to repay its short-term obligations, in light of the company's limited access to external sources of capital. We will also closely monitor the company's ultimate strategic direction and capital structure as well as the overall recovery for bondholders once the restructuring plan is consummated. Urbi has limited liquidity and its cash flows continue to be stressed, which likely implies difficulty in being able to quickly develop and sell homes. Furthermore, Moody's expects that the company will continue to experience deterioration in its operating profits and credit metrics.

Should the debt restructuring plan result in higher loss severity for bondholders than the loss reflected in the Ca rating, the ratings will be downgraded to C.

Moody's Investors Service downgraded Urbi's global scale foreign currency senior unsecured debt rating to Ca from Caa2. The rating remains under review for downgrade.

The following ratings were downgraded and remain under review for downgrade:

MOODY'S INVESTORS SERVICE

Urbi Desarrollos Urbanos, S.A.B. de C.V. -- Global scale foreign currency senior unsecured debt rating to Ca, from Caa2

MOODY'S DE MEXICO

Urbi Desarrollos Urbanos, S.A.B. de C.V. -- National scale Certificados Bursatiles program rating to Ca.mx, from Caa2.mx (global scale local currency rating to (P)Ca from (P) Caa2), its national scale senior unsecured debt rating to Ca.mx, from Caa2.mx (global scale local currency rating to Ca from Caa2) and its corporate family rating to Ca from Caa2.

The following rating was affirmed:

Urbi Desarrollos Urbanos, S.A.B. de C.V. -- National scale commercial paper program at MX-4 (global scale local currency at Not Prime)

The last rating action with respect to Urbi took place on April 23, 2013 when Moody's Investors Service downgraded Urbi Desarrollos Urbanos, S.A.B. de C.V.'s ("Urbi") global scale foreign currency senior unsecured debt rating to Caa2 from B2. The rating remained under review for downgrade. Moody's de Mexico downgraded Urbi's national scale Certificados Bursatiles program rating to Caa2.mx, from Ba2.mx (global scale local currency rating to (P)Caa2 from (P)B2), its national scale senior unsecured debt rating to Caa2.mx, from Ba2.mx (global scale local currency rating to Caa2 from B2) and its corporate family rating to Caa2 from B2. These ratings remained under review for downgrade. Urbi's commercial paper program on the national scale was affirmed at MX-4 (global scale local currency commercial paper program rating affirmed at Not Prime).

Urbi Desarrollos Urbanos is a publicly traded, fully integrated homebuilder engaged in the development, construction, marketing and sale of affordable housing in Mexico. The firm reported total assets of approximately $47.6 billion Mexican pesos and equity of approximately $15.1 billion Mexican pesos at March 31, 2013.

The principal methodology used in this rating was Global Homebuilding Industry Methodology published in March 2009. Please see the Credit Policy page on www.moodys.com.mx for a copy of this methodology.

Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

REGULATORY DISCLOSURES

Information sources used to prepare the rating are the following : parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

The rating has been disclosed to the rated entity prior to public dissemination.

A general listing of the sources of information used in the rating process, and the structure and voting process for the rating committees responsible for the assignment and monitoring of ratings can be found in the Disclosure tab in www.moodys.com.mx.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.mx.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

This Rating is subject to upgrade or downgrade based on future changes in the financial condition of the Issuer/Security, and said modifications will be made without Moody's de Mexico S.A. de C.V accepting any liability as a result.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com.mx for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com.mx for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com.mx for further information.

Please see www.moodys.com.mx for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

The ratings issued by Moody's de Mexico are opinions regarding the credit quality of securities and/or their issuers and not a recommendation to invest in any such security and/or issuer.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Philip Kibel
Senior Vice President
Commercial Real Estate Finance
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Nicholas Levidy
MD - Structured Finance
Commercial Real Estate Finance
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700

Moody's downgrades Urbi's senior unsecured debt ratings to Ca.mx, ratings remain under review for downgrade
No Related Data.

 

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