Fitch downgrades Emeco

Fitch Ratings said it downgraded Emeco Holdings Ltd.’s long-term issuer default rating to B- from B+.

The outlook is negative.

The agency also said it downgraded the rating on the $335 million 9 7/8% senior secured notes due in 2019 to B- from BB- and assigned a recovery rating of RR4.

The notes are issued by Emeco Pty Ltd., are secured against the assets of Emeco group and guaranteed by Emeco and some of its subsidiaries, Fitch said.

The downgrade reflects deterioration in Emeco’s profitability and cash flow generation, such that its credit metrics are no longer consistent with a B+ profile, the agency said.

The prolonged weakness in global commodity markets has led to a rapid decline in revenue and shrunk Emeco’s operating scale, Fitch said.

The agency also said it expects Emeco’s leverage to remain high at more than 6x over the short- to medium-term.

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