Research Update: Coronado Global Resources Downgraded To 'B-' On Covenant Pressure And Tightening Liquidity; Outlook Negative

Waivers on Coronado Global Resources Inc.'s syndicated facility agreement expire on Sept. 30, 2021, and the Australia-based coal company is unlikely to satisfy its covenant test for Sept. 30, 2021. It is not immediately clear to us whether the lenders will grant an additional covenant waiver. Coronado is reviewing its capital structure to support its liquidity. In our view, absent a significant improvement in metallurgical (met) coal prices or major recapitalization, Coronado's liquidity will continue to tighten because of weak operating cash flow and reductions in the size of syndicated facilities. On March 31, 2021, S&P Global Ratings lowered its issuer credit rating on Coronado to 'B-' from 'B'. The negative outlook reflects our view that Coronado's covenant pressure will

...- Waivers on Coronado Global Resources Inc.'s syndicated facility agreement expire on Sept. 30, 2021, and the Australia-based coal company is unlikely to satisfy its covenant test for Sept. 30, 2021. - It is not immediately clear to us whether the lenders will grant an additional covenant waiver. Coronado is reviewing its capital structure to support its liquidity. - In our view, absent a significant improvement in metallurgical (met) coal prices or major recapitalization, Coronado's liquidity will continue to tighten because of weak operating cash flow and reductions in the size of syndicated facilities. - On March 31, 2021, S&P Global Ratings lowered its issuer credit rating on Coronado to 'B-' from 'B'. - The negative outlook reflects our view that Coronado's covenant pressure will remain elevated and the company's liquidity will likely continue to tighten over the next six months amid weak external market conditions....

Research Update