S&P cuts Kernel Holding

S&P said it downgraded Kernel Holding SA and its senior unsecured ratings to SD and CC from B-.

“The rating action reflects Kernel's request to postpone repayment of $866 million short-term bank borrowings which are due March-September 2022 to the end of September 2022. These bank loans comprise inventory-linked working capital facilities, other unsecured local bank loans, and an offshore facility. We understand the group is confident it can secure the support of its lenders. We consider this to be a selective default under our methodology, as an S&P Global Ratings' issuer credit rating is a forward-looking opinion that focuses on the obligor's capacity and willingness to meet all its financial commitments as they come due,” S&P said in a press release.

The agency said Kernel has the cash and is willing to make the $19.875 million coupon payments due in April under its outstanding senior unsecured notes.

“We will re-evaluate our ratings on Kernel when we no longer consider there is a high likelihood of a payment default, and we have capacity to evaluate the company's business and financial prospects in a satisfactory manner,” S&P said.

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