Moody’s downgrades Latam Airlines

Moody’s Investors Service said it downgraded Latam Airlines Group SA’s corporate family rating to B1 from Ba3. Moody’s also downgraded Latam Pass-Through Trust 2015-1A to Baa1 from A3 and Latam Pass-Through Trust 2015-1B to Ba1 from Baa3. The ratings have been placed on review for downgrade.

The spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented, the agency said.

The passenger airline sector has been one of the sectors most significantly affected by the shock given its exposure to travel restrictions and sensitivity to consumer demand and sentiment. The weaknesses in Latam’s credit profile leave it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Latam remains vulnerable to the outbreak continuing to spread, Moody’s said.

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