RATING ACTION:
On September 1, 2022, CariCRIS downgraded the credit rating assigned to the J $1 billion bond debt issue of Poly Pet Company Limited (Poly Pet or the Company) to jmBB+ (Local Currency Rating) on the Jamaica national scale. A negative outlook was assigned.
RATING SENSITIVITY FACTORS:
Factors that could, individually or collectively, lead to an improvement of the ratings and/ or Outlook include:
- An increase in PAT of above 10% for 2 consecutive years
- Improvement of the sovereign risk profile of Jamaica
- Improvement in the Company’s DSCR to over 1 time sustained for more than 2 financial years (based on data from audited accounts)
- Improvement in Poly Pet’s debt to net shareholder’s equity ratio to below 2 times sustained for 2 financial periods (based on data for audited accounts)
- Sustained compliance with bond financial covenants for more than 2 financial periods (based on audited accounts)
Factors that could, individually or collectively, lead to a lowering of the ratings and/ or Outlook include:
- A greater than 10% decline in operating revenue
- A net increase in intercompany balances by 5% over the next 12 months
- Continued breach of covenants stipulated in the final term sheet/prospectus for the bond offering
- Inability to raise capital given the likelihood that the bond’s principal at maturity would need to be refinanced in 2025
- Changes in environmental laws and regulations towards reducing plastic use in Jamaica
- Deterioration in the sovereign risk profile of Jamaica
- Material deviation of Poly Pet’s audited financial accounts for June 2021 from management accounts presented, resulting in lower profitability and cash flow adequacy metrics
Analysts’ Contact Info:
Keith Hamlet
Mobile : 1-868-487-8356
Maxwell Gooding