S&P Mulls Chile’s Pampa Downgrade

S&P has placed its BB- ratings on Chilean investment company Sociedad de Inversiones Pampa Calichera (Pampa) on credit watch negative. “The credit watch action is based on the sizable amount of debt obtained at the controlling holding companies above Pampa that was used to strengthen Julio Ponce’s stake in Pampa,” says the agency. Those transactions included the acquisition of several minority stakes coupled with the acquisition of a 49% stake in YARA International at Inversiones SQYA, Pampa’s ultimate parent. Following those acquisitions, Ponce increased his stake in Pampa to about 70.37% from 25.13%, S&P adds. “As a direct consequence of these transactions, Pampa will face significant financial pressure to upstream cash to its parent structure, and therefore we would follow a consolidated approach to determine the impact on Pampa’s credit quality,” S&P adds. Pampa is a holding company whose sole activity is to hold shares of Chile-based chemical producer SQM, S&P adds.