Fitch downgrades Liberty Puerto Rico to ‘CCC’ rating
Fitch Ratings has cut Liberty Communications of Puerto Rico’s long-term issuer default rating to CCC from B, citing high leverage, tight liquidity and rising risks of a distressed debt exchange.
The downgrade also lowered ratings on the company’s revolving credit facility, 2028 term loan and senior secured notes due in 2027 and 2029 to CCC+, with a recovery rating of RR3.
Fitch said the move followed weaker-than-expected results in the second half of 2025 and Liberty’s announcement of liability management plans tied to what the agency called an “unsustainable capital structure.”
Adding to the pressure is Liberty Latin America’s plan to separate from its Puerto Rican unit, announced earlier this month. The step “removes prior expectations of shareholder financial support,” Fitch said, meaning the company is now expected to meet liquidity needs on its own.
The agency said Liberty’s net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio peaked at about 10.7x in 2024 and, while projected to decline to about 8x by 2026, remains elevated.
“Fitch believes LCPR may pursue a distressed debt exchange type of transaction to lower its debt quantum and the current high leverage,” the report said.
Liberty faces sizable obligations, including $72 million in annual payments for spectrum assets through 2027 and $1.2 billion in secured notes maturing in October 2027. Free cash flow is expected to stay negative over the next two years.
As of June, the company reported $22 million in cash and had drawn $57 million from a $172.5 million revolving credit line. Fitch noted the maintenance covenant would only be tested if a third of the facility is used.
The company is Puerto Rico’s largest broadband and pay-TV provider and ranks third in mobile services, behind T-Mobile and Claro. First-quarter 2025 revenue was split with fixed services contributing 41%, mobile 42% and business-to-business 14%.
Fitch expects subscriber losses in mobile postpaid to slow and average revenue per user to improve modestly.
In its recovery analysis, the agency assumed Liberty would emerge from a potential default as a going concern, with a distressed enterprise value multiple of 5.5x and EBITDA of about $330 million. That supported a recovery rating of RR3 for secured instruments, reflecting moderate recovery prospects in the event of restructuring.
Despite some operational gains projected for 2025 and 2026, Fitch does not expect an upgrade soon, citing the company’s heavy debt load and refinancing risks. Further deterioration in financial indicators, or the announcement of a restructuring, could bring additional downgrades, the agency said.
