S&P cuts Americanas

S&P said it lowered its global scale issuer credit rating on Americanas SA to B from BB and the Brazilian national scale rating to brA- from brAAA while also placing all the ratings on CreditWatch with negative implications. Additionally, it also cut the issue-level ratings on JSM Global Sarl and B2W Digital Lux Sarl's senior unsecured notes to B and placed the ratings on CreditWatch, with no change in the recovery rating of 4 (45%).

On Wednesday, the company disclosed it identified accounting problems initially estimated at R$20 billion, mainly related to supplier financing operations.

“The downgrade reflects our expectations of higher leverage, despite the lack of full information at this point on the breadth of the accounting inconsistencies and their impact on the company's financials. Americanas' main cash-flow leverage metrics were already under some pressure with debt to EBITDA and FFO to debt of 5.5x and 7.9%, respectively, for the last 12 months ended Sept. 30, 2022, before the announcement of the inconsistencies,” S&P said in a press release.

The agency warned another further downgrade is possible in the coming months.

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