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 CC from CCC-. The 4 recovery rating on the notes, which indicates average (30%-50%; rounded estimate 40%) recovery prospects in default, is unchanged.

The downgrade follows Idesa's announcement it commenced an offer to exchange all of its outstanding senior secured notes of about Ps. 6.2 billion (about $310 million) due 2026 with a 9 3/8% interest rate for new senior secured notes due 2028 with a 6½% interest rate, S&P said. The new notes will be guaranteed by Idesa's main subsidiaries.

While the new notes will extend the company's maturities and offer some interest cost savings due to the lower interest rate, S&P said it considers the offer a distressed debt exchange because lenders will get less than originally promised.

“In addition, all existing debt holders are essentially being primed by the senior position of the new notes, as the proposed notes will add a new subsidiary-guarantor of Idesa (Etileno XXI SA de CV). Therefore, the new notes effectively will rank senior in right of payment to all of the existing and future unsecured debt, including the existing secured notes due 2026 (which will become unsecured debt if the offer and solicitation are successful), to the extent of the collateral,” the agency said in a statement.

S&P said it considers Idesa’s capital structure unsustainable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.