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S&P: Latam Airlines bonds BB-
Standard & Poor’s said it assigned a BB- rating to Latam Airlines Group SA’s proposed $500 million five-year senior unsecured bonds.
The rating on the bonds is one-notch lower than the corporate credit rating, given significant priority debt in Latam’s capital structure, which mainly consists of aircraft leasing, S&P said.
The senior debt accounts for about 42% of the company’s total assets, resulting in one-notch deduction from the corporate credit rating, the agency said.
The company’s net leverage metrics is expected to rise because Latam will use the bulk of the proceeds to repurchase the outstanding 2020 bonds, S&P said.
The company will use the remainder to strengthen its cash reserves and for general corporate purposes, the agency said.
The issuance will help improve Latam’s capital structure by extending debt-maturity profile and lowering interest rates, S&P said.
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