Related Issuers
LATAM Airlines Group S.A (LATAM) Related Research Credit Opinion: LATAM Airlines Group S.A (LATAM): New issuer - Update following post-bankruptcy exit financing issuance
Rating Action:

Moody's assigns B2 ratings to LATAM Airlines and its $2.25 billion secured notes and term loan in connection with its post-bankruptcy exit financing; outlook is stable

22 Sep 2022New York, September 22, 2022 -- Moody's Investors Service ("Moody's") has today assigned a B2 corporate family rating (CFR) to LATAM Airlines Group S.A (LATAM) in connection with its post-bankruptcy exit financing. At the same time, Moody's assigned a B2 rating to the proposed $2.25 billion senior secured notes and term loan to be co-issued by LATAM and Professional Airline Services Inc., a Florida corporation and a wholly owned subsidiary of LATAM, due in 5 and 7 years. The outlook for the ratings is stable.



The rating assignment follows the confirmation order of LATAM debtor's joint plan of reorganization under the Chapter 11 of the US bankruptcy code issued on 18 June 2022 by the United States Bankruptcy Court of the Southern District of New York, which will allow the company to emerge from bankruptcy in the second half of 2022.



The rating of the proposed notes and term loan assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and assume that these agreements are legally valid, binding and enforceable.



Ratings Assigned:

..Issuer: LATAM Airlines Group S.A

.... Corporate Family Rating: B2

BANKING & INSURANCE

Leveraged Loan Default Volume In The U.S. Has Tripled This Year

Mayra Rodriguez Valladares
Senior Contributor
Oct 2, 2022,02:52pm EDT


The default rate this year has been rising both in high yield loans and leveraged loans. It is not as high as it was in 2020 or certainly not what it was in 2009. The fact that the default rising is important, however, because we are now in a very high inflationary environment globally. Rising central bank rates make it expensive and challenging for companies to refinance. Banks that lend to leveraged companies will have to be attentive to measuring rising risk weights and capital associated with these assets. Investors in the loans and bonds of leveraged companies or funds with those assets in them could also take losses due to the deteriorating credit quality of these assets and the volatility in asset prices caused by market nervousness about rising defaults.US Institutional Leveraged Loan and High Yield Bond Default Rates
FITCH RATINGSAccording to the “Fitch U.S. Leveraged Loan Default Insight,” the 2022 leveraged loan default volume so far this year totals $22.2 billion, three times higher than the $6.3 billion volume at this time in 2021. Cineworld, Diamond Sports, Envision, Endo, Lumileds, and RevlonREV +1% account for 72% of the 2022 default volume. In the second half of 2022, there have been ten defaults totaling $11.6 billion. If this trend continues, we should all worry whether credit will dry up for hundreds of very indebted companies. Moreover, defaulting companies will add to the unemployment rate, which until now has been fortunately low.