S&P lowers Matador

S&P said it lowered the ratings on Matador Bidco Sarl and its debt to B+ from BB-.

The outlook is stable.

“We expect Spanish energy company Compania Espanola de Petroleos SAU (Cepsa), in which Matador Bidco Sarl has a 38.4% stake, to pay reduced dividends of €150 million-€200 million per year in 2024-2026; well below our previous assumption of €350 million-€400 million a year. This is because Cepsa’s shareholders have decided to invest in energy transition and lowered the dividend in light of their commitment to maintaining an investment-grade rating,” S&P said in a news release.

Matador's EBITDA is fully dependent on its proportionate share of the dividends paid by CEPSA, so the reduction will increase Matador’s S&P Global Ratings-adjusted debt leverage over the next few years.

“We estimate that debt to EBITDA will rise to 8x-10x over the next few years and that Matador’s interest coverage ratio will be close to 1.5x,” S&P said in the news release.

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