Maxcom Telecomunicaciones Downgraded To 'SD' Following Distressed Exchange; Step-Up Senior Notes Due 2020 Cut To 'D'

  • Mexican integrated telecommunications services operator Maxcom announced on April 1 that it executed a debt repurchase for an additional $9 million of its senior secured step-up notes due 2020.
  • We view the debt repurchases, which we believe were conducted at prices substantially below par value, as tantamount to default.
  • On April 3, 2019, S&P Global Ratings lowered its issuer credit rating on Maxcom to 'SD' (selective default) from 'CCC+'. At the same time, we lowered our issue-level credit ratings on the company's step-up senior notes due 2020 to 'D' from 'CCC+'.
  • We will likely raise the rating on Maxcom back to the 'CCC' category shortly after considering the updated capital structure.
MEXICO CITY (S&P Global Ratings) April 3, 2019--S&P Global Ratings today took 
the rating actions listed above. The downgrade follows Maxcom 
Telecomunicaciones S.A.B. de C.V.'s (Maxcom) announcement on April 1, 2019, 
that the company has repurchased an additional US$9 million of its step-up 
senior notes 2020 through open markets. These transactions considered an 
average payment of US$59.75 for every US$100.0 as fair value, followed by the 
cancelation of these repurchased notes. Maxcom has reached up to $72 million 
in note repurchases, which represent 41.2% of the total issued amount, 
maintaining an updated outstanding amount of around $103 million.

We view the transaction as a distressed exchange because, in our view, the 
company offered less than the original promise on the bonds given the 
continuous repurchase of step-up notes below par, reaching a significant 
amount, higher than 40.0%, which according to our criteria we view as a 

We will likely raise the rating on Maxcom back to the 'CCC' category shortly 
after considering the updated capital structure. We will also assess the issue 
ratings based on traditional recovery analysis and considering the company's 
refinancing plans on its $103 million notes due June 2020.

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