“Considering the maturity date of this bond, this results in a payment default. Crédito Real has engaged DLA Piper LLP as legal counsel and FTI Consulting as restructuring counsel. In collaboration with their advisors, the company will continue to work on resolving its short-term and long-term financing situation, and in strengthening its financial position,” the company reported in a statement sent to the Mexican Stock Exchange (BMV).
Last Friday, S&P Global Ratings and Fitch Ratings lowered Credito Real’s rating to speculative grade warning that there is a growing risk that the company could default on a key debt payment due to lack of cash.
S&P highlighted in its report that Crédito Real’s results during 2021 are below its expectations. Together with the adverse market conditions in the region, it could continue to undermine the confidence of global investors, and this would weaken the company’s funding and liquidity position.
Until the third quarter, Crédito Real had 80 million dollars available, according to a report by Bloomberg.
Crédito Real is owned by the family that controls the appliance manufacturer Controllera Mabe SA. They created the company from what had been a small financing operation that provided loans to customers who bought Mabe products.
Credito Real now focuses on payroll loans, with a smaller portion of its business linked to small and medium-sized businesses, as well as microfinance and auto loans in the United States.
Eduardo Berrondo, a member of the family that founded Crédito Real and owns 27% of its shares, resigned last month citing a difference in values with the current administration, reported Bloomberg.
