Moody’s downgrades Puma Energy

Moody’s Investors Service said it downgraded Puma Energy Holdings Pte. Ltd.’s corporate family rating to Ba3 from Ba2 and its probability of default rating to Ba3-PD from Ba2-PD. Moody’s also downgraded the ratings assigned to Puma International Financing SA’s senior unsecured notes guaranteed by Puma Energy to Ba3 from Ba2. The outlook on all ratings remains negative.

The rating downgrade reflects the significant increase in Puma Energy’s financial leverage following a protracted period of weaker operating performance as the group has been facing challenging trading conditions in some of its key markets amid the widespread depreciation of emerging market currencies against the dollar.

In the past eighteen months, Puma Energy’s operating profitability has come under pressure as a result of adverse market conditions prevailing in some of its key countries. In Angola, the group’s unit gross margin markedly declined following the freeze on refined oil product prices imposed by the government in March 2018 in the context of its macroeconomic stabilization program, which was compounded by the decision to leave the exchange rate peg to the dollar leading to a sharp depreciation in the Angolan kwanza, Moody’s said.

Also, the group had to contend with intensifying competitive pressures in the Australian retail sector, as well as declining sales volumes in Puerto Rico. Overall, Moody’s expects Puma Energy will report a Moody’s-adjusted EBITDA of around $690 million in 2019, down 27% compared with 2017.

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