S&P cuts Enjoy, on watch

S&P said it downgraded Enjoy SA to B- from B and placed the rating on CreditWatch with negative implications.

The agency cited a fare increase for the Santiago metro that sparked violent protests in Chile’s largest cities. “All of Enjoy’s operations in Chile remained closed for over a week in October and since then, have only operated intermittently. We believe this will negatively affect revenues from Chilean operations by about 20% year-on-year in the fourth quarter of 2019,” said S&P in a press release.

S&P said it revised downward its revenue and EBITDA estimates for Enjoy for 2020, citing weaker growth prospects and possible demonstrations.

“Social turmoil has increased political uncertainty in the country, which has translated into a sharp depreciation of the domestic currency in October. Although we believe there might be some level of overshooting and that the peso could recover some ground towards the end of the year, we estimate depreciation could increase Enjoy’s debt levels by about 5%-10% by year-end, since almost 40% of the company’s debt is denominated in dollars and remains unhedged,” the agency said.

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