S&P places NagaCorp on watch

S&P said it placed its B ratings for NagaCorp Ltd. and its senior unsecured notes on CreditWatch with negative implications.

“Refinancing risk is rising for Naga as the debt maturity approaches, in our view. Naga has less room for operational missteps. Liquidity pressure is building ahead of the maturity date for its $472 million bond in July 2024. We believe the impending lumpy debt maturity, Naga's lack of established diversified funding sources, and tepid debt markets accentuate the weakness in the company's capital structure.

“That said, it is possible for Naga to accumulate sufficient cash to address its refinancing needs, in our assessment. This considers the company's reduced discretionary spending and our expectation of higher earnings following the pandemic,” the agency said in a press release.

The negative watch indicates an elevated potential for a downgrade if there is further erosion of NagaCorp’s liquidity as July 2024 nears, the agency warned.

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