Navios upgraded by S&P Global Ratings to B after repaying first-priority notes

Navios Maritime Holdings Inc. was upgraded today by S&P Global Ratings to B, from CCC, and its outlook revised to stable, from negative, after the company repaid its $455.5 million outstanding of 7.375% first-priority ship mortgage notes due Jan. 15. Ratings also upgraded the company's outstanding senior secured notes to B, from CCC-, and raised the issue and issuer ratings of its Navios South American Logistics Inc. subsidiary to B, from B-.

S&P Global Ratings noted that the 7.375% notes were repaid from the proceeds of new commercial bank facilities, sale leaseback agreements and pay-in-kind loans from an affiliate.

Ratings said it forecasts that Navios Maritime's free operating cash flow will improve in 2022 because of "robust" charter rate conditions in dry bulk shipping in 2022 and because of recovering logistics operations in South America. Ratings anticipates that the accumulated positive free cash flow will be sufficient to repay the $155 million outstanding of the company's senior secured notes due in August 2022.

The rating agency assessed the company's liquidity profile as "less than adequate," given its projection that sources will cover uses by around 1.1x over the upcoming 12 months. Ratings also noted Navios' "constrained" access to capital markets, lack of committed liquidity lines and "insufficient" cash on hand, making the company dependent on dry charter rates "performing consistently" with Ratings' base-case projections over the next two-to-three quarters.

In July 2021, Ratings downgraded Navios Maritime to CCC, from CCC+, on concerns about the company's ability to refinance the 7.375% notes.

Navios operates 36 dry bulk vessels and owns 64% of Navios South American Logistics Inc. and 10% of Navios Maritime Partners LP

* Article amended at 4:09 p.m. ET on Jan. 21, 2022, to correct the yield on the Navios notes.