S&P assigns Latam B-, notes, loan B+

S&P said it preliminarily assigned Latam Airlines Group SA a B- issuer rating, a B+ rating to the planned $1.5 billion of new senior secured notes, and to the proposed $750 million term loan, with a recovery rating of 1, which indicates a recovery of 90%-100% (rounded estimate: 95%) in default. The outlook is stable.

“Considering the milestones achieved in Latam's restructuring process and public guidance given by the company, our analysis assumes the company will exit Chapter 11 no later than November 2022, when it executes the proposed capital structure,” the agency said in a press release.

The outlook reflects the forecast that Latam's operations will continue recovering in the next two years. “We forecast its debt-to-EBITDA ratio will be about 5x and funds from operations (FFO) to debt around 10% by the end of 2023, and that it will emerge from bankruptcy with a comfortable liquidity position,” S&P said.

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