Research Update: Conuma Coal Resources Limited Issuer Credit Rating Lowered To 'CCC+' From 'B' On Liquidity Concerns; Outlook Negative

We believe Conuma Coal Resources Ltd. faces heightened risk of a liquidity shortfall given its negligible cash position and credit availability. The emergence of COVID-19 and S&P Global Ratings' expectation for a global recession are key risks to Conuma's near-term cash flow and liquidity position. We now believe Conuma is vulnerable to near-term cash outflows, which could result from relatively modest declines in its production and metallurgical coal prices. As a result, on March 26, 2020, S&P Global Ratings lowered its issuer credit rating (ICR) on Conuma to 'CCC+' from 'B'. At the same time, we lowered our issue-level rating on the company's senior secured notes to 'B-' from 'B+'. The '2' recovery rating on the notes is unchanged. The

...- We believe Conuma Coal Resources Ltd. faces heightened risk of a liquidity shortfall given its negligible cash position and credit availability. - The emergence of COVID-19 and S&P Global Ratings' expectation for a global recession are key risks to Conuma's near-term cash flow and liquidity position. - We now believe Conuma is vulnerable to near-term cash outflows, which could result from relatively modest declines in its production and metallurgical coal prices. - As a result, on March 26, 2020, S&P Global Ratings lowered its issuer credit rating (ICR) on Conuma to '###+' from 'B'. - At the same time, we lowered our issue-level rating on the company's senior secured notes to 'B-' from 'B+'. The '2' recovery rating on the notes is unchanged. - The negative outlook reflects our view of the risk that Conuma could face a liquidity shortfall this year, most likely from cash flow generation modestly below our expectations....

Research Update