Monday, 2 February 2009

Another One in Trouble: Metrofinanciera Faces Severe Cash Crunch, Ratings Downgrades, S&P Says

Standard and Poor's lowered on Friday the long-term counterparty credit rating on Metrofinanciera SA, a Mexican non bank-bank (or SOFOM) to CCC- from CCC+. The ratings company also trimmed its long- and short-term national scale counterparty credit and senior unsecured debt ratings on Metrofinanciera. The rating on Metrofinanciera's $100 million perpetual subordinated step-up securities was kept at C (junk rating.)

The ratings will remain on CreditWatch, which means they might be revised again within the next three months, with negative implications. S&P is concerned over Metrofinanciera's limited liquidity position, deteriorating cash-flow generation, and high debt burden. The company needs to refinance 3.3 billion Mexican pesos of liabilities by September; about 335 million pesos will come due on Feb. 26, 2009. ''In our opinion, support from Sociedad Hipotecaria Federal (SHF), a Mexican government-related entity, could diminish as a result of Metrofinanciera's depleted eligible assets. As a result, future funding support from SHF and other banks may be limited,´´ the ratings company said. This is not new -- we have been saying that the amount of assets on hand for additional financing will be insufficient to cover Metrofinanciera's unsecured and bank debt (click on the December posting we moved on Metrofinanciera.) An easy reading of this would be that S&P is sort of calculating a high probability that the company will end up restructuring its debt.

No comments:

Post a Comment