Moody’s downgrades Valid

Moody’s Investors Service said it downgraded global scale and national scale corporate family ratings for Valid SA to Ba3/A2.br from Ba2/Aa3.br. The agency revised the outlook to negative from under review. The downgrade and outlook revision conclude the study started on April 14, Moody’s said.

The downgrade incorporates the challenges relating to the pandemic’s effects, challenging operating environment, which will persist in the foreseeable future, and aggressive financial policy consisting of high dividend payouts combined with a short average maturity of its debt, Moody’s said.

“We believe Valid has a strong cash balance presently, sufficient to weather the operating challenges of 2020, but that amortizations in the short-term have increased considerably with an estimated over R$1 billion due in 2021 and 2022, raising liquidity risk,” Moody’s said in a press release.

“The negative outlook incorporates Valid’s increasing liquidity risk, with an estimated over R$1 billion in debt maturing between 2021 and 2022, in a challenging operating environment,” the agency said.

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