Fitch Downgrades Vitro's IDR to 'B-'; Remains on Watch Negative

MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings has downgraded the following ratings for Vitro, S.A.B. de C.V. (Vitro):

--Foreign currency Issuer Default Rating (IDR) to 'B-' from 'B';

--Local currency IDR to 'B-' from 'B';

--US$300 million senior notes due 2012 to 'B-/RR4' from 'B+/RR3';

--US$225 million senior notes due 2013 to 'B-/RR4' from 'B+/RR3';

--US$700 million senior notes due 2017 to 'B-/RR4' from 'B+/RR3'.

Fitch has also downgraded the following national scale ratings of Vitro:

--National scale long term rating to 'BB(mex)' from 'BBB-(mex)';

--Certificados Bursatiles issuances due 2008, 2009 and 2011 to 'BB(mex)' from 'BBB-(mex)'.

All ratings remain on Rating Watch Negative.

The rating downgrades reflect Vitro's expected increase in leverage due to the unwinding of its derivative contracts. Leverage is expected to rise above 4.5 times (x) from 3.9x, which is no longer consistent with the previous rating category. The downgrades also consider the potential additional pressure on the company's liquidity associated with its derivative positions. The rating actions anticipate the company will have to restore liquidity through several transactions; failure to complete these transactions could limit its financial flexibility to serve near-term obligations. The Rating Watch Negative reflects Vitro's weak liquidity position as well as the difficulty in attaining financing during this period of financial turmoil. As of Sept. 30, 2008, the company had unrestricted cash balances of approximately US$72 million and had short-term debt of US$158 million. In addition, Vitro continues facing a challenging operating environment due to reductions in economic growth in Mexico and other regions where the company has a presence.

Vitro is the leading producer of flat glass and glass containers in Mexico, serving the construction, automotive, beverage, retail, and service industries. Vitro exports products to more than 50 countries. During the last 12 months ended Sept. 30, 2008 Vitro had sales of US$2.7 billion, EBITDA of US$371 million, exports of US$636 million and foreign sales by subsidiaries of US$917 million.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.