Fitch downgrades Kuwait Energy, notes to CCC

Fitch Ratings said it downgraded Kuwait Energy plc's long-term issuer default rating and the senior unsecured rating on its $250 million 9½% notes due 2019 to CCC from B-. The recovery rating is RR4.

The ratings were removed from rating watch negative.

Fitch said it believes the probability of default increased due to market conditions not allowing completion of the IPO in the first half of 2017, and without there being available alternative sources of long-term funding that are needed to repay upcoming convertible bond payments, finance capex and improve liquidity.

With no immediately available undrawn credit facilities, liquidity over the next 12 months is expected to stay below $50 million.

“The intention to launch an IPO is still being considered, as well as other financing arrangements, with more clarity expected later on in the year. Volatile oil markets and geopolitical concerns over MENA may impact investor sentiment,” the agency said in a news release.

“As soon as longer-term financing is obtained, Fitch will re-evaluate Kuwait Energy's liquidity and rating. Failure to obtain long-term financing may lead to further negative action.”

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