Fitch shifts Peru LNG view to negative

Fitch Ratings said it affirmed Peru LNG SRL’s long-term foreign and local currency issuer default ratings at BBB-. The agency revised the outlook to negative from stable. The rating also includes $940 million of senior unsecured notes due 2030.

“PLNG’s negative outlook reflects the weaker operational performance given the declining international prices for natural gas, and consequent higher leverage due to decreasing EBITDA generation. Per Fitch’s recently updated Oil & Gas Price Deck reflecting a deteriorated scenario for Henry-Hub (HH) and National Balance Point (NBP) indexes, materially higher leverage has been forecast for PLNG, with leverage metrics expected to reach a peak of 9.2x during 2019,” Fitch said in a press release.

Fitch said it believes falling international gas prices should result in a slower deleverage trajectory for Peru LNG than initially expected, with net leverage potentially staying above 4.5x for the next few years and then decreasing as the bond starts amortizing. “Fitch expects PLNG to not distribute any dividends over the rating horizon in order to accumulate cash to make front to debt amortization payments starting in 2024.”

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