Moody’s cuts Petra Diamonds, notes

Moody's Investors Service said it downgraded Petra Diamonds Ltd.’s corporate family rating to B2 from B1 and probability of default rating to B2-PD from B1-PD.

At the same time, the agency downgraded to B3 from B2 the rating assigned to the $650 million senior secured notes due May 1, 2022 and issued by Petra's wholly owned subsidiary, Petra Diamonds US Treasury plc. The notes are guaranteed by Petra and some of its subsidiaries.

All the ratings are on review for further downgrade, because of the near-term liquidity risk that Petra faces. In particular, based on Moody's forecasts, it is uncertain as to whether the company can meet its covenant tests on Dec. 31, 2017 and June 30, 2018, without its banks providing either a waiver or reset of its covenants, or a combination of both.

"The downgrade, along with the possibility of a further downgrade if covenant pressure is not addressed, reflects our expectation that Petra's credit metrics will be more in line with a B2 rating over the next 18 months, and our concerns over the strength of Petra's liquidity profile over the next nine months," Moody's vice president and senior analyst Douglas Rowlings said in a news release.

"If Petra breaches its covenant tests on 31 December 2017, and its banks recall the facilities, the company will not have sufficient liquidity under Moody's forecasts to meet its operating needs."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.