S&P downgrades Isolux Corsan

S&P said it lowered the long-term corporate credit rating on Isolux Corsan SA to CC from CCC-.

The agency also said it affirmed the company’s C short-term corporate credit rating.

S&P also said it lowered the rating on the company's €850 million senior unsecured notes to CC from CCC-. The recovery rating on this debt instrument is unchanged at 4, indicating 30% to 50% expected default recovery.

The outlook is negative.

The downgrades reflect a view that Isolux's announced debt restructuring is a distressed exchange, S&P said.

The company is currently highly vulnerable to the non-payment of its debt obligations due to its weak liquidity and weak operating cash flows, which are insufficient to cover its short-term debt and fund ongoing operations or working capital, the agency explained.

On June 28, Isolux announced a proposal to restructure all of its outstanding debt and its plans to implement the transaction principally by way of Spanish homologation, which means the company would need the approval of at least 75% of creditors to proceed with restructuring, S&P said.

This offer is viewed as a distressed exchange because of Isolux's currently weak credit standing and liquidity, the agency said.

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