Moody's gives Latam, notes, loans B2

Moody's Investors Service said it gave a B2 corporate family rating to Latam Airlines Group SA in connection with its post-bankruptcy exit financing. The agency also assigned B2 ratings to the planned $2.25 billion of senior secured notes and term loan to be co-issued by Latam and its subsidiary Professional Airline Services Inc., due in five and seven years. The outlook is stable.

The ratings follow the June 18 confirmation order of Latam’s reorganization plan under Chapter 11 of the U.S. bankruptcy code, which will enable the company to emerge from bankruptcy in the second half of 2022, Moody’s said.

“Latam's B2 rating reflects the company's scale and superior network connectivity that translates into a leadership position in four out of the five domestic markets in which it operates and in intraregional flights in Latin America as of December 2021, along with its well-diversified business portfolio of air transportation services and strategic alliances. The rating is also supported by Latam's improved post-bankruptcy capital and cost structures and adequate liquidity, which will allow the company to weather the volatile recovery of the industry,” Moody’s said in a press release.

However, weak credit metrics and an unstable airline industry considering the effect of inflation on costs limit the rating, the agency said.

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