S&P rates Kaltex notes CCC

S&P said it gave Grupo Kaltex SA de CV’s planned $220 million of five-year senior secured notes CCC issue and 3 recovery ratings. The 3 recovery rating indicates meaningful recovery prospects (50%-70%) in default.

Concurrently, the agency placed Kaltex and its ratings on CreditWatch with developing implications, indicating that there is an equal likelihood of either raising or lowering the ratings.

It will use the proceeds to repay its $220 million of senior secured notes due April 2022 through a cash tender offer.

“In our view, the successful completion of the proposed transaction–meaning the full refinancing of the existing notes–would significantly alleviate pressure on Kaltex's liquidity and capital structure and therefore would strengthen its credit profile. However, if the company isn't able to fully refinance its notes' upcoming maturity, we think that Kaltex's default risk would continue to increase, and its credit profile would further worsen,” S&P said in press release.

S&P said it aims to resolve the CreditWatch placement when the new issuance is completed and has fully assessed the transaction's effects on the company's liquidity and capital structure.

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