Fitch cuts Kernel to CC

Fitch Ratings said it downgraded Kernel Holding SA's long-term foreign- and local-currency issuer default ratings to CC from CCC. The agency also dropped the company's $300 million of senior unsecured notes due 2024 and $300 million of senior unsecured notes due 2027 to C/RR6/0% from CCC/RR4/50%.

“The downgrades reflect the difficult operating conditions Kernel has been facing since the beginning of the Russian invasion, the severe disruption in export activities, the potentially weakening liquidity profile and our understanding that it has submitted waiver requests connected to delaying repayment of its bank facilities. We believe these events have led to a higher level of credit risk,” Fitch said in a press release.

The CC issuer rating reflects the probability of default, despite management's efforts to add liquidity by selling certain assets to the main shareholder, the agency said.

“Failure to obtain lenders' consent to delay payments would likely lead to a downgrade,” Fitch said.

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