In recent weeks, Standard & Poor’s has reported that Brunswick Rail, a Russian freight railcar lessor owned by Macquarie Infrastructure and Real Assets (MIRA), faces breaching covenants and, as a result, may need to prepay Russian ruble 4 billion (around £43 million) of its syndicated bank loan, due July 2016.
It is understood that the company is in the process of negotiating amendments to the loan, but a demand for full prepayment will likely lead to significant liquidity pressure, potentially resulting in a payment default. Consequently, S&P has reduced the Brunswick Rail’s corporate credit rating to ‘CCC-‘ from ‘B-’.
Unless the company sees significant favourable changes in its circumstances, it is likely that it will default within the next six months. The situation isn’t helped by the fact that MIRA has closed its Moscow office and ceased sourcing new deals in Russia amidst the continuing financial crisis in the country.