The agency Fitch Ratings decided to lower Petróleos del Perú’s (Petroperú) long-term local and foreign currency issuer default ratings (IDR). In this way, it went from a rating of ‘BBB’ to ‘BBB-‘.
It also downgraded Petroperú’s senior unsecured notes to ‘BBB-‘ from ‘BBB’. Meanwhile, the IDRs and notes have been placed on Rating Watch Negative (RWN).
According to the credit rating agency, reviews and RWN are the reflection of the company’s lack of financial transparency and weak governanceas evidenced by the significant delay in the 2021 year-end financial audit.
“As a result, Fitch lowered the ESG governance score for Financial Transparency to ‘5’ from ‘3’ and revised Petroperu’s Independent Credit Profile (SCP) to ‘ccc’ from ‘b-‘. This led to a reassessment of Petroperú’s link to the sovereign, according to Fitch’s Government-Related Entity Criteria (GRE), and a top-down minus one rating approach.
Fitch adds that Petroperú’s leverage profile and cash flow continue to be weak and are expected to remain so throughout the rating horizon.
“The RWN reflects uncertainty regarding the company’s ability to provide audited financial information before May 30, 2022, possibly breaching a covenant in its bond issuance agreement. Fitch You understand that this constitutes an event of default, absent a waiver. If the company does not provide audited financial information and/or does not receive a waiver, the ratings will be further delinked from the sovereign rating and further downgraded”, he ends.
Source: Larepublica
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