Research Update: AFE S.A. Downgraded To 'CCC' From 'B-' On Growing Refinancing And Liquidity Risks; Off Watch; Outlook Negative

AFE S.A. is facing significant liquidity risk while it seeks to refinance its senior secured notes (SSNs), which mature Aug. 1, 2024. We think AFE might not have sufficient funds to repay its €60 million revolving credit facility (RCF), maturing in December this year, unless it undertakes extraordinary measures such as asset sales. We believe the risk of a distressed exchange of the SSNs is increasing as its maturity date approaches and financing conditions remain tight. We therefore lowered our long-term issuer credit rating on AFE and our issue rating on its SSNs to 'CCC' from 'B-' and removed them from CreditWatch, where they were placed with negative implications April 18, 2023. The negative outlook reflects the potential of downgrade

...- AFE S.A. is facing significant liquidity risk while it seeks to refinance its senior secured notes (SSNs), which mature Aug. 1, 2024. - We think AFE might not have sufficient funds to repay its 60 million revolving credit facility (RCF), maturing in December this year, unless it undertakes extraordinary measures such as asset sales. - We believe the risk of a distressed exchange of the SSNs is increasing as its maturity date approaches and financing conditions remain tight. - We therefore lowered our long-term issuer credit rating on AFE and our issue rating on its SSNs to '###' from 'B-' and removed them from CreditWatch, where they were placed with negative implications April 18, 2023. - The negative outlook reflects the potential of downgrade of up to two notches in the next six months if we think that a distressed exchange of the SSNs or an RCF default is imminent....

Research Update