U.S. building materials companies face 'tough slog' in 2012, but prospects are better for Latin American counterparts because of increased infrastructure spending: Standard & Poor's

Wendy Lisney

NEW YORK , February 7, 2012 (press release) – Standard & Poor's Ratings Services said today in an article that U.S.building materials companies are likely to have another tough year in 2012, while Latin American building materials producers will likely perform better because of increased spending on infrastructure. The report is titled "Credit Themes: A Tough Slog For U.S. Building Materials Companies Continues, While Latin American Peers Face Better Prospects."

In the U.S., the sector will remain stagnant thanks to tepid homebuilding and nonresidential construction activity, with an upturn unlikely until 2013 at the earliest, in our view. Thus, more than 25% of the approximately 40 U.S. companies we rate have negative rating outlooks or are on CreditWatch with negative implications.

In Latin America, by contrast, we expect building materials companies to fare relatively better, given increasing infrastructure spending by public and private entities in several countries.

"However, another U.S. recession, which doesn't seem likely in our view, or a significant hike in raw material costs could pose significant risks for these companies," said Standard & Poor's credit analyst Megan Johnston.

For the most part, we think companies in both regions will have sufficient liquidity to absorb rising raw material costs and weather whatever else comes their way--even another year of dismal demand in the U.S.

The report is available to subscribers of RatingsDirect on the Global Credit Portal atwww.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail toresearch_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column atwww.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.

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