Moody’s lowers Latam Airlines

Moody’s Investors Service said it downgraded the corporate family rating of Latam Airlines Group SA to B1 from Ba2.

Moody’s also said it downgraded to B2 from Ba3 the foreign-currency rating assigned to its $500 million senior unsecured notes due in 2020.

The agency also said it downgraded Latam Pass Through Trust 2015-1A to Baa1 from A2 and the 2015-1B tranche to Ba1 from Baa2 .

The outlook is stable.

The downgrades reflect a larger-than-anticipated slowdown of the airline industry in Latin America, particularly in Brazil, which materially affected the company’s revenues and cash generation in 2015, Moody’s said.

As a result, Latam’s liquidity is strained as the company faces meaningful near-term debt maturities and capital commitments amid unfavorable market conditions, the agency said.

Despite the company’s significant effort to adjust the business for a more challenging operating environment in 2016, Moody’s said it believes the company’s leverage metrics and liquidity will remain pressured until at least 2018.

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