S&P puts Petroquimica Comodoro on negative watch

S&P said it placed the B- rating on Petroquimica Comodoro Rivadavia on CreditWatch with negative implications.

“The CreditWatch placement reflects the company’s tighter liquidity due to high capital expenditures (capex), mainly to develop its renewable energy business unit. PCR largely financed its capex with bank lines with high amortizations during the next two years. Given that the wind farms’ cash flow generation is increasing gradually, the company is dependent on debt refinancing with local banks in order not to further pressure its liquidity position in the short term,” said S&P in a press release.

S&P said it sees the company fighting to meet its net leverage of 2.5x by the end of the year and 2.0x in 2020.

“This suggests that PCR will have to either ask for a bank waiver or directly renegotiate the financial covenants package going forward. The liquidity contraction and constant need to refinance prevented the company from improving its capital structure in the last year and a half,” the agency said.

The outlook is negative.

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