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S&P upgrades Kernel rating to CC from SD
KYIV. March 2 (Interfax-Ukraine) – S&P Global Ratings has raised our long-term issuer credit rating on Kernel to ‘CC’ from ‘SD’ (selective default) with the negative outlook, S&P said in a press release.
“We have raised our long-term issuer credit rating on Kernel to ‘CC’ from ‘SD’ (selective default) and affirmed our ‘CC’ ratings on the notes. The negative outlook indicates that we could lower the ratings if Kernel defaults again on some or all of its debt instruments over the next few months,” S&P said.
S&P said that in view of Kernel’s weak credit profile, S&P believes new waivers, restructuring deals with creditors, or payment defaults to be inevitable in the coming months. In fiscal year ended June 30, 2022 (FY2022), S&P Global Ratings-adjusted debt to EBITDA skyrocketed to over 8.0x from 1.7x in FY2021.
“Over the next 12 months, we consider highly unlikely that Kernel’s creditworthiness will improve, unless there is a material recovery of export flows from Ukraine. We anticipate new waivers on the repayment of bank debt in the next six months, should the situation remain stable until June 2023, and a default or restructuring of the outstanding notes this year or in 2024,” the agency said.
An upgrade would hinge on normalization of the operating environment in Ukraine, such that the company’s export capacity returns to pre-war levels.