S&P Sees Gruma Settling Debt Issue

S&P believes Mexican tortilla maker Gruma will be able to convert its derivative instruments into a term loan, but is keeping the company’s B+ ratings on credit watch negative. “We have determined that the company’s announcement that it had obtained an extension until August 24, to conclude negotiations with its derivatives counterparties to convert $726.6m related to these instruments into term loans will not affect the CreditWatch action,” the agency says. Although the company has not finalized the details of such loans, S&P expects them a secured 7.5-years facility at Libor plus 2.875% for the first 3 years. “The high likelihood that it will successfully negotiate its term loan mitigates most of our concerns regarding Gruma’s foreign-exchange derivative exposure. We could, therefore, affirm the rating at B+ once the company closes the term loans transactions,” S&P adds.