Indika Energy: Moody's downgrades ratings to B1 from Baa3
Materials
Lucror broadly agrees with Moody’s downgrade, consistent with their “Negative” Credit Bias since Aug 24. Weak metrics are set to deteriorate further amid higher-than-budgeted capex at the Awak Mas gold project and subdued thermal coal prices. Leverage is projected to rise to c.7.0x Debt/EBITDA in FY26 (from c.6.0x in FY25) before easing toward c.4.0x in FY27 as gold operations stabilise. Liquidity is viewed as adequate over the next 12-18 months, but covenant headroom will tighten, particularly around the 3.75x Net Debt/EBITDA test. That said, the Newcastle coal benchmark has stabilised for almost a year now, so, Indika’s credit metrics may not worsen much more going forward and Lucror agrees with Moody’s outlook revision to stable. They maintain a "Buy" recommendation on the INDYIJ 8.75 '29s at 99.6/8.9%/2.7Y, as the high yield more than compensates for the weak and deteriorating credit profile.
Edition: 230
- 20 February, 2026
Colombia and Peru: Credit deterioration
The fiscal stances and institutional qualities have been deteriorating in Colombia and Peru, and Marcos Buscaglia analyses whether this could impact their credit ratings. Running several models, he sees convergence to BB from BB+ for Colombia and expects more downgrades from Moody's. Peru’s S&P rating will remain stable, but Moody’s and Fitch will oversee downgrades, leaving the country on the brink of becoming a fallen angel. On the economic front, Marcos expects Colombia’s GDP growth to outperform consensus at 2% and expects BanRep to deliver another 50bp cut in June. Peru will see similar growth rates, and Marcos forecasts that the BCRP will continue with the easing cycle, with more 25bp reductions and a terminal rate of 4.5%.
Edition: 186
- 17 May, 2024
Technology
Post 2Q results, Craig Huber increases his 12-month TP to $389 based on averaging 20.5x 2025E EBITDA (or 26.0x adjusted EPS) and his 10-year DCF analysis (9.0% WACC, 4.5% long-term FCF growth rate and 22.3x terminal FCF multiple). He thinks debt issuance trends are going to improve significantly over the next 2-3 years and MCO should benefit materially and at a time when it is currently tightening its costs to become even more efficient. Street adjusted EPS estimates for 2024-25 look significantly too low; Craig's 2023-25 estimates are $10.25/$12.40/$15.10 vs. consensus forecasts of $10.07/$11.47/$13.20.
Edition: 166
- 04 August, 2023