Fitch lowered this Wednesday the ratings of the financial entity Royal Credit to ‘DR‘ (restricted default), in national and foreign currency, for not having covered the payment of its global bond issued for 170 million Swiss francs, which had a maturity date of February 9, 2022.
The bond in question was issued in February 2018 and pays an interest rate of 2.875 percent.
Fitch mentioned in a statement that “a Swiss bond payment default could trigger possible cross-acceleration clauses in its other debt, according to the public offering memorandums of Royal Credit”.
“Fitch will reassess Credito Real’s ratings once it is clear about the entity’s plans. The ongoing negotiation did not lead to a timely payment and the entity has not publicly articulated whether previous plans and ongoing funding remain unchanged following the payment default,” he added.
The non-payment caused the company’s shares to suffer an accumulated drop of 51.44% in two consecutive days, standing at a level of 2.36 pesos per title, in addition its market value registered a decrease of 981 million pesos.
Royal Credit announced this Wednesday that it hired a firm and a consultancy as legal advisors, to see if a process of debt restructuringwhich could constitute a forced debt swap, which would lead the rating agency to assess the entity’s financial flexibility after the restructuring process is complete, this could result in a positive rating action if the swap improves prospects funding and liquidity.
Since last Friday, the qualifiers Fitch Ratings Y S&P Global Ratings cut the station’s rating from B-‘ to ‘CC’ and from ‘B-‘ to ‘CCC’, respectively, on their global scale.
kg