S&P trims AFE

S&P said it lowered its ratings on AFE SA and its senior secured notes to B- from B and placed the ratings on CreditWatch with negative implications.

“We believe that AFE's refinancing risk has increased due to currently tough financial market conditions and its shortening debt maturity profile. Unlike some of its peers, AFE didn't access the market over the last six months to refinance its outstanding €307.5 million senior secured notes maturing in August 2024. This, in turn, constrains its access to bank lending, except very short term, and has led management to significantly reduce its investments this year to accumulate liquidity until a refinancing is achieved,” the agency said in a press release.

AFE’s €90 million revolver, which had €88.5 million drawn as of Dec. 31, is due in June. S&P noted, “While negotiations appear to be well advanced, and we expect the company will extend the RCF, the new amount will be reduced, and the maturity will be shorter than 12 months. We assume that if AFE fails to refinance its senior secured notes by year-end, it will have to repay all of its RCF, which would leave its liquidity position highly sensitive and vulnerable.”

The negative watch indicates a 50% likelihood of a downgrade if the company does not refinance its notes or the revolver in the next three months, the agency warned.

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