S&P cuts Guacolda Energia

S&P said it downgraded Guacolda Energia SA’s ratings to B from B+ and removed them from CreditWatch with negative implications where it placed them on June 1.

The company’s new owner hasn't disclosed the company's future strategy, specifically, dividend policies and bond refinancing.

“The lack of clarity over refinancing plan is what most concerns us from a credit perspective, because our base-case scenario doesn't include contract renewals at their expiration. Therefore, we don't believe that Guacolda will generate sufficient cash to repay its $500 million bond due April 2025. Our cash flow analysis suggests a deficit of $150 million by mid-2025, which can increase further in case of unexpected dividend distributions or if the company decides to take a more aggressive approach to leverage, which is permitted given that financial covenants don't limit new debt or dividend payments,” S&P said in a press release.

The outlook is negative.

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