The credit rating of Petroperu was cut again. This time the agency Standard & Poor’s (S&P) lowered the company’s long-term rating from BBB- to BB+ with a negative outlook.
The S&P decision places the oil company in a ‘junk’ bond category, which means that it is of low yield and with a high risk of non-payment.
This is added to the cut by the Fitch agency, which also lowered its rating this week, leaving it one step away from the same category and opening the door to a reality that Peru had previously warned about21.
Petroperú is now exposed to a serious deterioration of its liquidity since, if a cross default is triggered, the bondholders can quickly request the payment of US$3,000 million plus interest, corresponding to part of the financing that the oil company obtained for the modernization of the Talara refinery. This scenario is already partially contemplated by S&P.
“Petroperú recently announced that its auditor would not sign the contract for the audit of the fiscal year ending December 31, 2021. In the midst of conditions of political uncertainty in Peru, we consider this event as a clear sign of the weakening of Petroperú’s governancewhich exposes the company to a potential breach of covenants and potentially to a significant deterioration of its liquidity and financial flexibility”, the agency report reads.
irresponsible management
Hydrocarbons expert Carlos Gonzales Ávila considered that the negligence of the new management of Petroperú, headed by its general manager Hugo Chávez, led to a series of errors that caused the company to receive the cut.
The most relevant errors would have been the change of the Finance Manager just before the beginning of the audit of the financial statements that the consulting firm PwC was going to carry out and the request to it to include an indefinite confidentiality clause, as revealed by Peru21. In that sense, Gonzales considered that the solution implies that Chávez leaves the general management, something in which Anthony Laub agrees.
“It’s not just Chavez, the people he has appointed and the entire board of directors also have to leave. Let us remember that they have removed the corporate governance manager, the communications manager, they changed the 14 managers who had been hired via a headhunter firm. To redo what has been done, they would have to undo all the accumulated mistakes of this management since Mr. Chávez entered Petroperú, ”he assured.
Data
-The Comptroller General announced a new public contest to elect Petroperú’s auditor.
-The entity reported that PwC withdrew its proposal because the oil company decided to make changes to the work schedule, among other factors.
