(Alliance News) - Moody's Investors Service on Wednesday upgraded Petra Diamonds Ltd's corporate family rating to Caa1 from Caa3.
The outlook for Petra Diamonds has changed to positive from ratings under review. This concludes the review for upgrade initiated on March 17.
Moody's said the decision to upgrade Petra's rating reflects an improved balance sheet and liquidity profile following the completion of the company's capital restructuring in early March. The restructuring involved replacing the previous USD650 million guaranteed senior secured second lien notes with USD337 million of new notes. The remainder of the previous notes were converted into equity.
The restructuring led to gross debt being materially reduced to about USD450 million from USD810 million, the ratings agency noted.
The Caa1 corporate family rating reflects supportive long-term diamond market fundamentals, well-prospected underground mines, and the completion of the capital restructuring.
Moody's said it forecasts an improvement in Petra's credit metrics as a result of modest recovery in diamond prices and higher throughput targets.
The positive outlook, meanwhile, reflects the potential for the rating to be upgraded over the next 12 to 18 months should there be a sustainable improvement in diamond prices that results in improved credit metrics and cash flows.
Petra shares closed 1.3% higher in London on Wednesday at 1.54 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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Petra Diamonds (PDL)