Fitch rates HPCL-Mittal Energy notes BB-

Fitch Ratings said it assigned HPCL-Mittal Energy Ltd.’s proposed dollar-denominated senior unsecured notes an expected rating of BB-.

Fitch rated HMEL’s proposed notes one notch below its issuer default rating, and at the same level as the existing senior unsecured bonds. The agency cited the high proportion of secured debt in the company’s capital structure as its reason for the rating.

Majority of the proceeds of the proposed notes will be used to refinance secured borrowings, which should reduce the proportion of secured debt, the agency said.

“However, the ratio of secured debt / EBITDA would remain above 3x, which is well above Fitch’s threshold of 2.0 to 2.5x for material subordination of unsecured debt, resulting in one notch lower rating than its IDR,” said Fitch in a press release.

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