S&P downgrades Cineworld's long-term debt on expected near-term liquidity pressures
Analysts at Standard&Poor's downgraded their view on Cineworld's long-term debt, warning of the risk significantly lower than expected cinema admissions over coming months could lead to a rapid worsening of its liquidity position.
"Cineworld Group PLC's liquidity position could rapidly deteriorate over the next few months, as cinema admissions remain significantly below our previous expectations, increasing the probability of a default," S&P said.
The ratings agency also forecast that operating conditions for global out-of-home entertainment would remain "tough" through the fourth quarter of 2020 and in the following year because of the pandemic.
Hence S&P downgraded its rating on the company's long-term debt from CCC+ to CCC- with a negative outlook attached.
"The negative outlook reflects the uncertainty on whether Cineworld would be able to stabilize its cash flow and liquidity and obtain additional financing and a covenant waiver.
"It also reflects the potential risk of a distressed debt exchange."