Moody’s turns Pemex outlook to negative

Moody’s Investors Service said it revised its outlook for Petroleos Mexicanos (Pemex) to negative from stable but affirmed the B1 ratings on the company and its senior unsecured notes.

“The negative outlook on Pemex's ratings reflects Moody's view that absent fundamental changes in Pemex's business strategy the company is likely to face increased credit risks, given the inability of the company to increase capital investments and improve its financial and operating performance as a result of liquidity constraints,” the agency said in a press release.

Moody’s said it expects the Mexican government’s support “will continue to be very high in 2023 and 2024.” However, it warned the next administration, due to take office in late 2024, may not be so generous.

Fitch changes GEMS outlook to positive

Fitch Ratings said it changed GEMS Menasa (Cayman) Ltd.’s outlook to positive from stable while affirming its B long-term issuer default rating. The agency also affirmed its senior secured debt rating at B+ with RR3 recovery ratings.

“The positive outlook reflects our expectations of financial leverage falling below 5x by financial year ending August 2024 and robust free cash flow (FCF) generation. This will be driven by profit gains on strong student enrollments, the resumption of tuition fee rises, and the full recovery of transport services and extra-curricular activities (the support services division) exceeding their pre-pandemic levels, as pupils return to in-class learning,” Fitch said in a press release.

Fitch gives KDC loans B

Fitch Ratings said it assigned B/RR3 ratings to KDC US Holdings, Inc.’s and kdc/one Development Corp.’s five-year revolver and five-year term loan with dollar and euro tranches. Zobele Mexico, SA de CV is a co-borrower on the revolver. The agency changed the outlook to stable from positive and affirmed its ratings, including the B- issuer default rating.

The revised outlook assumes the “given Fitch-defined EBITDA leverage stays above 7x, with leverage at 7.2x at the end of FY23 (ended April 30) compared to previous expectations for EBITDA leverage in the mid 6x range and the weakening in interest coverage metrics due to the increase in borrowing costs,” the agency said in a press release.

S&P cuts DTEK Renewables

S&P said it downgraded DTEK Renewables BV’s senior unsecured notes to D and its issuer rating to SD, or selective default, from CCC-, respectively.

“We lowered our foreign currency rating on DTEK Renewables following its distressed debt exchange. In January 2023, Ornex Ltd. – the Cyprus-registered subsidiary of DTEK Renewables – announced a tender offer to buy up to €20 million of its €325 million senior unsecured green bonds maturing in November 2024. The transaction resulted in DTEK Renewables buying €35.79 million of the green bonds for €14.98 million. The buyback price was materially below par, at no more than 41% of the bonds' face value and representing about 11% of the total bonds,” S&P said in a press release.

The agency said it plans to review the issuer credit and issue ratings on DTEK Renewables within the next two days. “We understand that this transaction optimizes the group's capital structure by reducing its outstanding debt, thereby reducing leverage and avoiding a future potential default.”

DTEK’s CCC- long-term local-currency issuer rating is unchanged and remains on negative watch, where it was placed on March 7.

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