InfraBuild bonds hit as Greensill collapse draws Fitch warning (updated)

Prerna Infrabuild

15/03/2021 15:43

(Adds GFG Alliance declining comment)
    By Abhinav Ramnarayan
    LONDON, March 15 (Reuters) - Australian steelmaker
InfraBuild's bonds fell on Monday after credit ratings agency
Fitch placed it on watch for a downgrade due to uncertainty
caused by the collapse of Greensill Capital, the main funder of
its parent company GFG Alliance.
    GFG Alliance, a holding company for the assets of mining
magnate Sanjeev Gupta, was the biggest recipient of financing
from Greensill, a British financing company, which filed for
insolvency last week.
    Fitch has put both the "BB-" ratings on InfraBuild --
formerly known as Liberty OneSteel -- and the "BB" rating on its
$325 million senior secured notes due October 2024 on ratings
watch negative (RWN). 
    This means that both the debt and company could face a
downgrade in the near future, following a similar warning from
Moody's last week.  urn:newsml:reuters.com:*:nMDY9QwlBx
    "The RWN reflects increasing uncertainty from the funding
issues faced by GFG Alliance," Fitch analysts said in a note.
    "Problems at GFG Alliance could have a contagion effect on
its various companies, including the Whyalla steelworks and
InfraBuild, and it may increase pressure on InfraBuild's
liquidity and disrupt the timely supply of billets and
structural steel."
    The contagion may arise from a number of related-party
transactions under various agreements, the analysts added.
    InfraBuild did not immediately respond to a request for
comment. A spokesman for GFG Alliance declined to comment.
    Gupta said on Friday the conglomerate was in talks with
Greensill's administrators on a so-called standstill agreement
which would pause its debt payments to Greensill for an agreed
period of time.  urn:newsml:reuters.com:*:nL1N2LA0Z3     
    The supply chain finance firm filed for insolvency last
Monday after losing insurance coverage for its debt repackaging
business and said in its court filing that GFG Alliance had
started to default on its debts.  urn:newsml:reuters.com:*:nL1N2L61DL
    InfraBuild's bonds maturing in October 2024 fell 75 cents on
the dollar to a cash price of 98.625 on the Fitch move,
translating to a yield of 12.488%.  AU203188927=  
    The bonds were trading at 108.5 at the start of the month,
or a yield of 8.268%. 
    The debt is secured against assets which has limited the
fallout. InfraBuild's loan documents and collateral provide
adequate protection for creditors, the Fitch analysts said. 
     Fitch said it believes that InfraBuild has adequate
liquidity of 250 million Australian dollars, which consists of
cash and committed undrawn balances under a AUD250 million
asset-based lending facility as of end-February 2021. 
    The facility matures in October 2022. In addition,
InfraBuild does not have any arrangements or credit facilities
related to Greensill.

 (Reporting by Abhinav Ramnarayan; Editing by Carmel Crimmins
and Alexander Smith)
 ((Abhinav.Ramnarayan@thomsonreuters.com; 0044 751 745 1044;))