Coronado Global Resources Inc.

The negative outlook reflects our view that Coronado will continue to burn cash absent a material recovery in met coal prices. Sequential periods of negative operating cash flows could impede the company's access to funding markets and erode available liquidity. We could lower the rating within the next six months if met coal prices do not materially recover. This would likely be indicated by: Continued negative free operating cash flows (operating cash flows less capital spending); or Less-than-adequate liquidity (i.e. liquidity sources, including access to the revolving credit facility, are less than 1.2x liquidity uses over the following 12 months). We could revise the outlook to stable if we believe there is a broader market recovery of sufficient scale and

...We believe the sharp decline in seaborne met coal demand and prices due to coronavirus-driven reduction in steel demand will likely increase Coronado Global Resources Inc.'s leverage to the low 4x in 2020. Significant cuts in steel production globally softened the price index of premium low-volatility (low-vol) hard coking coal (HCC) to under US$110 per ton (/ton) in 2020, from nearly US$150/ton at the beginning of the year. This has led to Coronado's significantly lower price realization expectations for 2020. Furthermore, we expect negative free operating cash flow for Coronado in 2020, which will continue to weigh on Coronado's balance sheet and liquidity into 2021. The group's focus on operating cost control and reducing capital expenditure by 40% in the year ending Dec. 31, 2020, should help mitigate some of these downward pressures. In our view, there remains considerable uncertainty around the timing and pace of a recovery of broader global industrial activity. We view the pace of...

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