Moody's upgrades Latam Airlines

Moody's Investors Service said it upgraded the corporate family rating of Latam Airlines Group SA to Ba3 from B1.

The agency upgraded the foreign-currency rating assigned to the company’s $500 million senior unsecured notes due in 2020 to B1 from B2.

The agency also said it upgraded Latam Pass-Through Trust 2015-1A to A3 from Baa1 and the Latam Pass-Through Trust 2015-1B to Baa3 from Ba1.

The outlook is stable.

Moody’s said the upgrades are a result of Latam's improvements in operating performance, leverage and liquidity observed during the last two years.

The upgrades also consider a view that the improved results are sustainable and leverage will continue to improve during the next 12 to 18 months.

Accordingly, Latam posted a marked recovery in its operating margin and leverage measured by a total adjusted debt-to-EBITDA ratio that reached 9% and 4.6x, respectively, at the end of 2017.

The company also increased its cash balance, which reached nearly 22% of net revenues at the end of 2017, the agency added.

The ratings reflect the company's leading market position in Latin America with a well-diversified business portfolio of air transportation services, superior network connectivity and strategic alliances, along with an improving operating structure and liquidity that will allow it to remain competitive going forward, Moody's said.

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