S&P lowers Grupo Idesa

S&P said it lowered its ratings for Grupo Idesa SA de CV and its senior secured notes due 2026 to CCC- from CCC+. The 4 recovery rating on the notes, indicating average (30%-50%; rounded estimate 40%) recovery prospects in default, is unchanged.

“As of today, the company hasn't put into place any action plan to significantly slash its debt to comply with the financial burden inherent to its interest and coupon payments on its main debt instruments (Ps. 5 billion Banco Inbursa loan due 2025 and Ps. 6.2 billion senior secured notes due 2026). As a result, Idesa's debt still remains significant for its financial capacity and liquidity, at about Ps. 12.6 billion. This translates into debt to EBITDA of 12.6x and a tight interest coverage ratio of 0.8x as of Sept. 30, 2022. The highly leveraged balance sheet has significantly tightened the company's liquidity, which weighs on the ratings,” the agency said in a press release.

S&P warned it estimates Idesa will not produce enough EBITDA from operations to service its debt.

The outlook is negative.

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