Fitch puts Freeport LNG on watch

Fitch Ratings said it placed Freeport LNG Investments, LLLP’s ratings on rating watch negative. The issuer default rating is B and the secured debt rating is affirmed at B+/RR3. Before this action, the outlook was stable.

“The RWN reflects the credit impacts resulting from a release of liquefied natural gas (LNG) at a pipe rack array that is used by all three LNG trains at Flngi's Brazoria County, Texas LNG facility (Freeport Plant). The release of the LNG resulted in a damaging fire. Flngi is structurally subordinated to multiple senior secured debt instruments that have cash traps, among other contractual rights,” Fitch said in a press release.

The agency said it anticipates the issuer will use one of the measures provided under its debt structure in order to make the next two quarterly debt service payments on time.

“Fitch will be evaluating certain operational and financial matters over the next 100 days in order to judge whether Flngi has either/both a distressed liquidity condition, and/or less robust long-term cash flows than the flows that were incorporated into the award of the B IDR,” the agency said.

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