New Fortress Energy downgraded to ’RD’ after missing interest payment

Investing.com -- Fitch Ratings has downgraded New Fortress Energy Inc.’s Long-Term Issuer Default Rating to ’RD’ from ’CCC’ after the company missed an interest payment due November 15 on its $2.7 billion 12% senior secured notes due 2029.

The company has entered a forbearance agreement with certain noteholders that expires on December 15, 2025, securing a 30-day grace period for the payment.

Fitch also downgraded NFE’s $2.7 billion 12% senior secured notes and term loan B to ’C’ with a Recovery Rating of ’RR4’. The 6.50% senior secured notes due September 2026 and 8.75% senior secured notes due March 2029 were downgraded to ’C’/’RR5’.

The rating agency cited NFE’s "execution challenges across its projects and an untenable capital structure" as factors in the downgrade. The company has delayed filing its third-quarter 10-Q report and is not in compliance with NASDAQ requirements.

NFE’s liquidity is described as "highly constrained" with approximately $551 million in unrestricted cash as of June 30, 2025, though Fitch believes current cash levels are lower. The company has no remaining availability on its revolver and received waivers for debt ratio and fixed charge coverage ratio covenants for the second quarter of 2025.

Under Fitch’s updated assumptions, NFE’s leverage is expected to exceed 15.0x in 2025-2027. The company’s EBITDA was more than 50% lower than Fitch’s estimates for the quarter, and second-quarter EBITDA was negative.

High interest expenses, averaging around $900 million annually over the next three years, further constrain the company’s financial flexibility. Fitch does not include any payments from FEMA in its forecast for the next 12 months.

The rating agency noted that NFE has hired financial advisors, signaling "its intent to pursue a broader restructuring." The company faces upcoming maturities including payments on a $100 million revolver due April 2026 and $511 million in 6.5% senior secured notes due September 2026.

Operational challenges include the inability to secure final approval for gas supply contracts in Puerto Rico and ongoing construction of multiple projects including FLNG2 and power plants in Brazil. Fitch estimates that Brazil will account for approximately 30% of NFE’s EBITDA in 2025-2027, with negative free cash flow projected over the next three years.

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