Moody’s slashes Mega

Moody’s Investors Service said it downgraded Operadora de Servicios Mega, SA de CV Sofom ER’s long-term global foreign-currency senior unsecured debt rating and its long-term global local- and foreign-currency issuer ratings to B2 from Ba2. The agency also lowered the long-term corporate family rating to B2 from Ba2 and revised the outlook to negative from stable.

“Today's rating action reflects Mega's greatly diminished funding ability and business prospects, resulting from a market confidence crisis that has hurt the sector of non-bank financial companies in Mexico. Uncertainties around sector have grown exponentially over the past two years, driven by a string of highly publicized defaults of peer companies; four of the six Mexican non-bank lenders with outstanding debt in the international markets have defaulted on their foreign currency bonds since 2021 due to tightened liquidity buffers and accounting errors that resulted in material portfolio write-offs,” Moody’s said in a press release.

“Moody's believes that the industry's tightened conditions will pressure Mega's overall financial performance and profile in light of its $352 million outstanding international bond due in February 2025. Under these challenging funding conditions, the company's refinancing risks increase for the next 24 months, which will limit business origination capacity and, thus, reduce future earnings generation,” the agency said.

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