S&P puts Grupo Famsa note on watch

S&P said it placed the rating for Grupo Famsa SAB de CV’s senior secured notes due 2024 on CreditWatch with negative implications and affirmed the company’s SD issuer rating. The recovery rating of 3 on the notes indicates an expectation of a meaningful recovery prospect of 50%-90% in a hypothetical default.

On June 30, the group’s Banco Ahorro Famsa SA lost its license to operate as a commercial bank in Mexico. The government said it will liquidate the bank.

“In our view, this event will severely disrupt the company’s operations and could affect its debt-restructuring plan, involving the recent prepackaged Chapter 11 filing, in which the company sought to get judiciary approval to continue servicing unimpaired debt, meaning all obligations except 2020 notes,” S&P said in a press release.

On Thursday, Famsa announced it wouldn’t pay interest and principal on its local debt certificates with ticker Gfamsa 04819, and won’t pay the interest due on another one with ticker Gfamsa 06019. “The company made this decision as a result of BAF’s ongoing liquidation,” S&P said.

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