S&P slices, pulls Mulhacen ratings

S&P said it lowered its long-term issuer credit rating on Mulhacen Pte Ltd. to D from C and the rating on the senior secured PIK toggle bond due 2023 to D from CC, and subsequently withdrew the rating on the bond, since it is no longer outstanding.

The downgrades follow the completion of Mulhacen’s exchange that S&P said it considers a distressed debt exchange.

“The transaction involved the exchange of the existing bond for shares equivalent to 40% of the capital of Mulhacen's owner, Teide. It also involved the issuance by Teide of a new second-lien facility totaling about €317.5 million–as opposed to the initially announced new PIK bond–maturing in December 2026, with a face value of 55% of the principal amount of Mulhacen's PIK toggle bonds outstanding on the closing date, plus all accrued interest.

“We consider the transaction as distressed and tantamount to a default, since bondholders have received less than they were originally promised and in the form of a longer-tenor, more junior instrument,” the agency said in a press release.

S&P said it plans to upgrade Mulhacen’s issuer rating in the next few days given the completion of the exchange.

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