S&P pulls Panama Canal Railway from watch

S&P said it affirmed its ratings on Panama Canal Railway Co., including the BB- issuer rating, and removed them from CreditWatch with negative implications.

The railroad generated about $16.4 million in EBITDA in last 12 months ended Sept. 30, reduced short-term operating and financial risks, stemming from the accident at the Gamboa Bridge that caused the railroad to suspend operations for more than 90 days. “In our view, the management actions were key in preventing liquidity from deteriorating,” S&P said in a press release.

The agency said it forecasts a 37% decline in freight volume in 2020, given the three months of suspended operations, which will hurt revenue and EBITDA.

“In addition, we expect the company's leverage metrics to spike in 2020, with an adjusted debt to EBITDA at 3.5x-4x and FFO to debt of 20%-15%,” S&P said.

The outlook is negative.

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