Monterrey.- Fitch Ratings decidió hoy rebajar la calificación de las deudas a largo y corto plazo locales (LT) y extranjeras y la posibilidad de default (IDR) de Alpha Holding, SA de CV (AlphaCredit) a ‘RD’ desde ‘C’.
Fitch afirmó el ráting de los bonos globales senior no garantizados de 2022 y 2025 en ‘C’.
La rebaja del ráting a RD (limitado o restringido) sigue al vencimiento del período de curación de 30 días después de la falta de pago del cupón de US$15 millones con vencimiento el 19 de junio de 2020 en los bonos globales de la entidad por USD300 millones con vencimiento en 2022.
Cabe recordar que la calificación ‘RD’ indica que un emisor experimentó un incumplimiento de pago no subsanado, pero no se ha declarado en quiebra ni ha dejado de operar.
En abril de 2021, la compañía mexicana anunció el hallazgo de errores contables relevantes y retiró sus estados financieros y otra información relevante disponible para los inversores de su sitio web.
Las notas globales de Alpha Holding tienen convenios relacionados con la divulgación de los estados financieros anuales auditados, cuyo período de curación finalizó en mayo de 2021.
Aún no se publican estados financieros reformulados y la compañía no ha revelado una fecha de publicación esperada.
Fitch Downgrades Alpha Holding to ‘RD’ on Uncured Payment Default
Monterrey – 22 Jul 2021: Fitch Ratings has downgraded Alpha Holding, S.A. de C.V.’s (Alpha Holding) Long-Term (LT) Local and Foreign Currency Issuer Default Ratings (IDRs) and its Short-Term (ST) Local and Foreign Currency IDRs to ‘RD’ from ‘C’. Fitch has affirmed the senior unsecured 2022 and 2025 global notes at ‘C’.
We do not maintain a Recovery Rating for the notes, reflecting that the potential recovery outcome is highly variable. Per Fitch’s rating definitions, the assigned rating of ‘C’ is consistent with average to poor recovery prospects following default.
The downgrade of the ratings follows the expiry of the 30-day cure period after the non-payment of the USD15 million coupon due on June 19, 2020 on the entity’s USD300 million global notes due 2022. The ‘RD’ rating indicates an issuer that in Fitch’s opinion has experienced an uncured payment default but has not entered into bankruptcy filings or ceased operating.
Fitch will re-assess Alpha Holding’s ratings based on our forward-looking assessment of the company’s credit profile once we have clarity on the company’s plans and financial information is provided.
KEY RATING DRIVERS
On June 17, 2021 the company announced that it would exercise a 30-day grace period with respect to the USD15 million cash interest payment due on June 19, 2021 with respect to its USD300 million 10.0% senior notes due in 2022. Alpha Holding’s failure to make the payment after the grace period expired is consistent with Fitch’s definition of an ‘RD’ rating.
In April 2021 the company announced the finding of relevant accounting errors and withdrew its financial statements and other relevant information available for investors from its website. Alpha Holding’s global notes have covenants related with the disclosure of the annual audited financial statements, the cure period for which ended in May 2021. Restated financials have not been published yet and the company hasn’t disclosed an expected publication date.
Alpha Holding has an ESG Relevance Score of ‘5’ for Financial Transparency given the accounting error announcement, lack of market disclosure after the event and uncertainties on the financial impact and resolution timeframe. Alpha Holding also has an ESG Relevance Score of ‘5’ for Governance Structure, reflecting Fitch’s concerns over intrinsic governance practices and the effectiveness of the board in protecting creditors’ rights. Fitch changed Alpha Holding’s ESG Relevance Score for Management Strategy to ‘5’ from ‘3’ as management’s ability to handle risks and controls, to service debt obligations and to disclose pertinent information has relevantly deteriorated. This has a negative impact on the credit profile and is highly relevant to the rating.
Fitch will monitor the sufficiency of information for the ongoing evaluation of the entity’s creditworthiness, which could result in a rating withdrawal at the current level if the entity does not disclose sufficient information to Fitch and the market.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
–The IDRs would be downgraded to ‘D’ if the entity enters into bankruptcy proceedings, administration, receivership, liquidation or other formal winding-up procedures or if it ceases operations.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
–Fitch would re-rate Alpha Holding and the notes if a debt restructuring process is initiated and sufficient disclosure of the company’s plans and financial information is provided.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Fitch has revised Alpha Holding’s ESG Relevance Score for Management Strategy to ‘5’ from ‘3’ due to the relevant deterioration of management’s ability to manage risks and controls, to service debt obligations and to disclose pertinent information. This has a negative impact on the credit profile, is highly relevant to the rating and, in conjunction with other factors, resulted in a downgrade of the company’s IDRs.
Alpha Holding has an ESG Relevance Score of ‘5’ for Financial Transparency due to the lack of available financial information after the April 2021 announcement of accounting errors and weaknesses in the company’s third-party disclosure and internal controls, given the lack of market disclosure after the event and uncertainties on the financial impact and resolution timeframe for the issue. This has a negative impact on the credit profile and is highly relevant to the rating, resulting in a one-notch downgrade.
Alpha Holding has an ESG Relevance Score of ‘5’ for Governance Structure due to Fitch’s concerns about the company’s intrinsic governance practices and perceived weakness in the board’s effectiveness to protect creditors’ rights. This has a negative impact on the credit profile and is highly relevant to the rating, resulting in a downgrade of the company’s IDRs.
Alpha Holding has an ESG Relevance Score of ‘4’ for Customer Welfare — Fair Messaging, Privacy & Data Security given its exposure to reputational and operational risks as its main business targets government employees and dependencies at relatively high rates. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of ‘3’. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity.
For more information on Fitch’s ESG Relevance Scores, visit www.fitchratings.com/esg