S&P shifts Consolidated Energy view to negative

S&P said it revised the outlook for Consolidated Energy Ltd. to negative from stable and affirmed its BB ratings.

“The negative outlook reflects our view that the decrease in methanol prices and operational setbacks at the Natgasoline plant’s ramp-up could erode the credit metrics. The U.S.-based plant had an unplanned outage of its waste heat boilers, resulting in a lower-than-expected production. These factors reduced the company’s revenue and EBITDA, raising debt to EBITDA above 6x in 2019,” said S&P in a press release.

The agency expects Consolidated’s credit metrics to gradually recover next year, citing a gradual rebound in prices and the Natgasoline plant’s ongoing output increase.

However, S&P thinks deleveraging will take longer than it had expected resulting in a debt to EBITDA of more than 4x in the next 12 months.

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