Moody’s lowers Obra Capital

Moody's Investors Service said it downgraded Obra Capital, Inc.'s corporate family rating and senior secured bank credit facility to Caa1 from B2 and its probability of default rating to Caa1-PD from B2-PD. The rating outlook was changed to negative from stable.

“The downgrade reflects Obra's weak operating performance and constrained liquidity that has resulted in very high leverage and weakening interest coverage. The company's leverage (debt-to-EBITDA with Moody's standard adjustments) stood at over 12 times as of June 30, 2023.

“The downgrade is further supported by Moody's view that Obra's liquidity will continue to be constrained as we expect the company's operating cash flow to remain negative over the next 12 months which will require the company to draw down its cash and investments to support debt service and other obligations,” the agency said in a press release.

However, Moody’s noted Obra is acting to buoy its earnings growth over time. “The rating action reflects our view that these new initiatives will take time to develop and therefore will not significantly change the company's earnings trajectory over the next 12-18 months given tighter financial conditions and a more challenging fundraising environment.”

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