Moody's snips Mega

Moody's Investors Service said it downgraded Operadora de Servicios Mega, SA de CV, Sofom, ER's corporate family rating to B3 from B2, and its long-term local- and foreign-currency issuer ratings to Caa1 from B3, as well as its foreign-currency senior unsecured debt rating to Caa1 from B3.

At the same time, the agency said it placed the ratings under review with direction uncertain. Previously, the outlook was negative.

Moody's said its decision to downgrade Mega's ratings was triggered by the announcement on Nov. 13, 2023, that the company terminated the offer to exchange its $350 million senior notes due in February 2025 because it did not get the 50% minimum required participation by the end of the offer expiration date.

“The rating downgrade reflects Moody's increasing concern about Mega's weakening liquidity management and the urgent need to bolster its liquidity.

“As of September 2023, the company's available cash liquidity only covered 46.1% of short-term maturities, which would fall to 14.6% if we would consider the $350 million bond maturity as short-term, and underscores Mega's needs to deal with this urgent matter over the next two months. Tightened financial conditions will continue to pressure Mega's ability to execute its funding plan, but Moody's acknowledges management's efforts and focus on securing new financing alternatives, as existing sources of liquidity will only marginally cover these maturities and therefore the company is dependent on raising new financing in short order,” Moody’s said in a statement.

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