Research Update: Sixsigma Networks Mexico (KIO Networks) Downgraded To 'B+' From 'BB-' On Greater Liquidity Pressure; Outlook Negative

Mexico-based IT managed and data services provider, Sixsigma Networks Mexico S.A. de C.V. (KIO Networks), reported MXN6.7 billion in revenue and MXN2.4 billion in adjusted EBITDA for the 12 months ended March 2020, down by mid-single digits from the 2019 results. The coronavirus pandemic has exacerbated already weak business conditions in Mexico and triggered recessions in other markets where KIO Networks operates. We estimate weaker cash flows, along with greater funding of managed services provisions through short-term debt, have eroded the company's liquidity position. On Aug. 12, 2020, S&P Global Ratings lowered its global scale issuer and issue-level ratings to 'B+' from 'BB-' on KIO Networks and its senior unsecured notes due 2025. The negative outlook reflects a potential downgrade

...- Mexico-based IT managed and data services provider, Sixsigma Networks Mexico S.A. de C.V. (KIO Networks), reported MXN6.7 billion in revenue and MXN2.4 billion in adjusted EBITDA for the 12 months ended March 2020, down by mid-single digits from the 2019 results. - The coronavirus pandemic has exacerbated already weak business conditions in Mexico and triggered recessions in other markets where KIO Networks operates. We estimate weaker cash flows, along with greater funding of managed services provisions through short-term debt, have eroded the company's liquidity position. - On Aug. 12, 2020, S&P Global Ratings lowered its global scale issuer and issue-level ratings to 'B+' from '##-' on KIO Networks and its senior unsecured notes due 2025. - The negative outlook reflects a potential downgrade in the next 6-12 months if the company's operating and financial performance results become weaker than our current expectations, stemming from a continued reduction in its cash reserves or greater...

Research Update