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Bond Market News
LATAM Airlines Upgraded to Ba2 by Moody’s
September 27, 2024
LATAM Airlines was upgraded by a notch to Ba2 from Ba3 by Moody’s, reflecting the company’s strong operational and financial performance in 2023-24. This follows an announcement of a proposed new issuance aimed at lowering the average debt cost. As of June 2024, the company’s adjusted leverage improved to 2.5x from 2.8x as of end-2023 and generated $968mn in free cash flow since the start of 2023. The company reported strong operating performance in 2024, with adjusted EBIT margin rising to 12% for the 12M ending June 2024, up from 7.5% in 2019. The company has restructured its cost base, simplified its fleet, increased variable costs, outsourced non-core functions, and renegotiated over 1,000 contracts, enhancing sustainability of its improvements. The company plans to continue initiatives to manage liabilities, reduce debt costs, and strengthen interest coverage, supported by ongoing improvements in its cost and capital structures.
Its dollar bonds traded stable with its 7% 2026s at 98.7 cents on the dollar, yielding 6.81%.
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