S&P downgrades New Fortress Energy to ’CCC’ amid refinancing concerns

Investing.com -- S&P Global Ratings has downgraded New Fortress Energy (NASDAQ:NFE) Inc. to ’ CCC (WA:CCCP)’ from a previous rating, citing mounting refinancing risk and issuing a negative outlook for the energy company.

The rating action follows New Fortress Energy’s underperformance in the first quarter of 2025, which prompted S&P to reassess its base-case estimates and the company’s ability to address upcoming debt maturities and other obligations.

After reviewing the company’s 10-Q filing for the period ended March 31, 2025, S&P estimates New Fortress Energy’s EBITDA for the trailing 12 months at approximately $750 million, significantly below its previous forecast of $900-$945 million.

S&P noted it is awaiting final details regarding natural gas supply contracts in Puerto Rico, which management expects to resolve soon. These contracts are expected to provide a stable cash flow base and most of the EBITDA for 2025.

The rating agency believes achieving the $750 million EBITDA target will require excess cargo sales and other spot sales of liquefied natural gas, which could prove challenging. Additionally, the company’s two main assets in Brazil, the CELBA and Portocem power plants, will not generate significant contracted cash flow until 2026.

As of March 31, 2025, New Fortress Energy had approximately $828 million in cash and equivalents, with about $380 million restricted for Brazil power projects. The remaining $448 million could fund working capital requirements and interest payments on debt, but S&P considers this unsustainable beyond a few quarters without significant revenue and EBITDA improvement.

The company faces a critical deadline related to its 6.5% senior secured note due September 30, 2026, which has about $510 million outstanding. This note includes a springing maturity clause on July 1, 2026, that could accelerate other debt obligations if not addressed.

S&P indicated it might lower its rating further if New Fortress Energy fails to refinance the 2026 notes when they become current, or if its liquidity deteriorates to the point where debt restructuring appears inevitable.

Conversely, the rating could be raised if the company successfully refinances its upcoming debt maturities and improves its liquidity position to a sustainable level.

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