S&P rates Orbia notes BBB-

S&P said it assigned a BBB- rating to Orbia Advance Corp. SAB de CV's planned senior unsecured sustainability-linked notes. The company plans to issue the notes in five- and 10-year tenors.

The rating is at the same level as Orbia’s issuer credit rating, reflecting the view that there's no significant subordination risk present in its capital structure, because debt at the subsidiaries' level represents about 4%, S&P said.

Orbia plans to use the proceeds to refinance debt, mainly its 2022 peso- and dollar-denominated notes. “Therefore, we don't expect the transaction to increase leverage. The notes will benefit from guarantees from Orbia's main subsidiaries and will rank pari passu in priority of payment with Orbia's existing senior unsecured debt,” the agency said.

“In our view, the proposed issuance will extend Orbia's debt maturity profile to an average term of about 14 years from about 12.6 years as of the first quarter of 2021. This would shift the largest debt maturities to 2026, 2027, 2031, 2042, 2044 and 2048, mainly related to its current bonds and the new issuance,” S&P said.

The outlook is stable.

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