Downgrade for Babcock and Brown International
Standard and Poor’s (S&P) has lowered its ratings for Babcock & Brown International (B&B), reflecting the financial challenges faced by the Australia-based company, highlighted in a restructuring program announced yesterday.
S&P’s long-term issuer credit rating for B&B, which is to shed 850 staff and sell all of its non-infrastructure assets, was lowered from BB- to CCplus, while its short-term rating was lowered from B to C.
The ratings remain on ‘CreditWatch’, which they have been on since November 10.
The CCCplus rating “reflects our view of an increased risk [that] B&B will fail to meet its $3.1 billion corporate facilities financial covenants”, said S&P credit analyst Sharad Jain.
“Should that occur, the banks might accelerate payments under the facilities,” he said, in which case, according to S&P’s rating criteria, a rating is likely to be lowered to D.
“We believe the company is likely to face significant challenges in selling its assets and businesses and, consequently, reducing its debt at the corporate level,” he added.
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