Fitch cuts Coazucar

Fitch Ratings said it downgraded Corporacion Azucarera del Peru SA’s long-term foreign and local currency issuer default ratings to B from B+. In addition, the senior notes were downgraded to B/RR4 from B+/RR4. The outlook is stable.

“The downgrades reflect weak operating performance, higher leverage, and a slower pace of deleveraging than initially anticipated due to the company’s weak operating performance following a sustained period of lower sugar prices. Fitch previously expected Coazcucar’s net debt to EBITDA ratio to reach about 4.5x by 2019. It now expects the net leverage ratio to trend toward 6.5x,” said Fitch in a press release.

Coazucar’s leverage remains high for the rating, and the path to deleveraging has been slower than Fitch previously expected due to weak international sugar prices and low profitability. Fitch sees Coazucar’s net debt to EBITDA trending to 6.5x in 2019, down from about 8.3x for the last 12 months ending Sept. 30. Fitch said it also expects to see deleveraging going forward despite the current environment of low sugar prices.

Fitch ups Automotores Gildemeister

Fitch Ratings said it upgraded Automotores Gildemeister SA’s long-term foreign and local currency issuer default ratings to CC from RD on completion of the company’s debt restructuring. Considering the terms and conditions of the company’s recently executed debt exchange offer, Fitch said it assigned a C/RR5 rating to the firm’s $510 million new senior secured notes due in 2025. Fitch also withdrew the ratings of the company’s secured notes due in 2021 that were exchanged for the new 2025 secured notes.

The upgrade of the firm’s IDRs to CC reflects Fitch’s assessment of the company’s capital structure, liquidity and cash flow generation resulting from the recently completed debt restructuring. The ratings mirror AG’s limited financial flexibility after completing the exchange. The ratings also consider the challenging business environment the company currently faces in its main markets, Chile and Peru, with a declining trend in unit sales in both markets, the agency said.

S&P ups Sofia

S&P said it raised its long-term issuer credit rating on the city of Sofia to BBB from BBB-. The outlook is positive.

The upgrade follows the Nov. 29 upgrade of Bulgaria to BBB from BBB-. “The rating on Sofia is supported by the city’s status as the administrative, financial, and commercial center of Bulgaria. Although national GDP per capita lags that of European and international peers, Sofia’s status supports higher wealth levels than the national average,” S&P said in a press release.

S&P revises Codelco view to negative

S&P revised the outlook on Corporacion Nacional del Cobre de Chile to negative from stable and affirmed Codelco’s A+ rating.

Codelco’s leverage will top 6x through 2021 assuming no material price hikes and no capital injections from the government, the agency said.

“Internal cash flow will fall short of our previous estimations by $1 billion in 2019 because of lower prices and less output. In the past few quarters, copper prices dipped nearly 10% while copper output shrank by 50,000 tons, mainly as a result of poorer ore grades than anticipated,” said S&P in a press release.

Capital spending remains at $4 billion per year while internal cash flow generation makes up for only half. Such a cash shortfall is making debt rise faster than the agency said it expected. “We estimate adjusted debt levels of $17.5 billion by the end of the year and nearly $20 billion in 2020, all else equal,” the agency said.

The negative outlook means S&P sees a one-in-three chance Codelco will be downgraded to A within 18 months.

S&P takes Doha Bank off watch

S&P said it affirmed and removed Doha Bank Assurance Co. LLC’s BBB ratings from CreditWatch with negative implications.

“In September 2019, the Qatar International Court and Dispute Resolution Centre ruled against DBAC in relation to a major advance payment and performance bond guarantee contract. This was one of the few unexpected large claims that DBAC received during 2018. The gross amount of this claim totaled QAR 63 million. Due to insufficient reinsurance coverage, DBAC is currently liable to the full amount, although we note that DBAC has taken legal recourse for recovery, the result of which remains uncertain at this stage. We understand that the other large claims are covered by DBAC's reinsurers, significantly limiting its net exposure. Nevertheless, we think there are deficiencies in DBAC's risk management practices,” said S&P in a press release.

The outlook is negative.

S&P: Mexico City Airport Trust off watch

S&P said it removed Mexico City Airport Trust from CreditWatch with negative implications and affirmed the BBB+ rating on the trust’s bonds.

“Given amendments to Mexico City Airport Trust’s bonds implemented in late December 2018, S&P Global Ratings believes risks to traffic performance and refinancing have significantly decreased. In addition, we believe uncertainties over the strategy for the airport transportation infrastructure in Mexico City’s metropolitan area have diminished in the past months following the release of a plan that contemplates the operation of three airports simultaneously and provides more visibility for the medium- and long-term horizon,” the agency said in a press release.

In addition, S&P said it hasn’t seen any unintended consequences from the cancellation of the construction of the new airport, including lawsuits from creditors or others claims, and doesn’t expect such events going forward.

The outlook is negative.

S&P: Panda Green to developing watch

S&P said it placed Panda Green Energy Group Ltd.’s CCC+ rating and the CCC rating on the company’s senior unsecured dollar-denominated notes on CreditWatch with developing implications. All the ratings were removed from CreditWatch with negative implications.

“The CreditWatch-developing placement reflects our view that PGE’s liquidity and capital structure would materially improve if Beijing Energy Holdings Co. Ltd. becomes the company’s largest shareholder, as planned. We believe Beijing Energy’s backing could help PGE meet its debt maturities, including $350 million in offshore notes due on Jan. 24. However, we are uncertain if the deal can be executed within the scheduled timeline, and a cancellation, or even a delay, would raise material uncertainty on how PGE plans to address its mounting near-term debt maturities,” S&P said in a press release.

Without an agreement, PGE may not be able to meet its looming debt obligations. At the end of September, PGE had around RMB 900 million of cash and short-term pledged deposits, with the expectation to receive around RMB 400 million to RMB 600 million of renewable subsidies by the end of the year, the agency said.

Moody’s shifts Banco Mercantil view to stable

Moody’s Investors Service said it revised the outlook for Banco Mercantil do Brasil SA to stable from negative, affirmed its global ratings and upgraded its banking ratings.

“The upgrade of Banco Mercantil’s long-term national scale ratings and the change in the outlook to stable, from negative, incorporate the steady improvement in the bank’s profitability over the past 12 months driven by lower funding and credit costs, and in capital, following the modestly better earnings, lower dividend payout and less capital consuming assets. The affirmation of Mercantil’s global scale ratings reflects Moody’s expectation that the bank’s financial performance will remain under pressure by persistently weak asset risk, by heightened competition and by a still heavy cost structure that will continue to limit the bank’s ability to generate sustainable and recurring results,” said Moody’s in a press release.

S&P shifts BR Properties view to stable

S&P said it revised BR Properties SA’s outlook to stable from negative and affirmed its BB- global scale and brAA+ national scale issuer credit ratings and issue-level ratings on the company.

“The outlook revision to stable follows BR Properties recent actions to decrease debt and improve operations. The company has already raised about R$1 billion from selling the Paulista, Barra da Tijuca and Chucri Zaidan buildings. The asset sale proceeds could increase by about R$610 million, once the company finalizes the sale of a portfolio of 12 non-core assets in the cities of São Paulo and Rio de Janeiro,” said S&P in a press release.

S&P said the company should have low leverage metrics after repays debt. “We also expect the company to deliver consistent vacancy rate improvements, resulting from better economic conditions and its focus on premium properties, increasing cash flow generation and improving EBITDA margin. We expect BR Properties to post a vacancy rate of about 15%, debt-to-capital of about 10%, and EBITDA interest coverage above 2x at the end of 2020,” the agency said.

Fitch rates Bocom notes A

Fitch Ratings said it assigned an expected rating of A to Bocom Leasing Management Hong Kong Co. Ltd.’s proposed senior unsecured dollar-denominated notes, which will be sold under Bocom’s $3 billion medium-term note program. The agency rates Bocom at A.

The proposed notes will benefit from a keepwell and asset purchase deed provided by Bocom’s parent, Bank of Communications Financial Leasing Co., Ltd.

Proceeds will be used for general corporate purposes, including investments in the leasing business of Bocom.

S&P rates Vena Energy BBB-

S&P said it assigned a BBB- rating to Vena Energy. Vena relies on the cash distributions from its nonrecourse projects to service its debt, after making other capital allocation payments, including dividend payments and growth-related capital spending at the project level.

On a portfolio basis, the company has meaningful diversity with a portfolio of more than 70 assets. These assets are in seven countries in Asia-Pacific and across multiple regulatory frameworks, which enhances the diversity of its regional economic conditions and which should support its solid earnings profile and moderate leverage. “Vena Energy also benefits from diversity in resource and counterparties,” said S&P in a press release.

Fitch acts on Kazakh banks

Fitch Ratings said it upgraded the long-term issuer default ratings of JSC Halyk Bank and its subsidiary, Halyk Finance to BB+ from BB. The outlooks are positive.

Fitch also revised the outlook on ForteBank to positive from stable and affirmed its IDR at B.

“The positive outlook on Halyk’s and Forte’s ratings reflects our expectations that the ratio of problem assets relative to capital should reduce further in the next 12-18 months, due to moderate additional provisioning, further capital built-up and some recoveries. If ratios of problem assets to capital fall, we may upgrade Halyk’s and Forte’s ratings by one notch if other credit metrics remain stable,” Fitch said in a press release.

Fitch affirmed the IDRs of Subsidiary Bank Sberbank of Russia at BBB- and ATF Bank JSC at B-, both with stable outlooks.

Fitch gives Ronshine notes BB-

Fitch Ratings said it assigned Ronshine China Holdings Ltd.’s proposed senior notes a rating of’BB-. The notes are rated at the same level as Ronshine’s senior unsecured rating because they are unconditionally and irrevocably guaranteed by the company.

“Ronshine’s ratings reflect the sustained improvement in Ronshine’s financial profile since 2018; leverage, measured by net debt/adjusted inventory, improved to 43% in 1H19, from 59% in 2017, on slowing land acquisition and healthy margins. Fitch believes the company has the incentive and ability to keep leverage below 45%, supported by its quality land bank, which is sufficient for development over the next three to four years and allows for flexibility in land acquisition,” said Fitch in a press release.

Ronshine intends to use the proceeds to refinance debt.

The outlook is stable.

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