Liquid Intelligent Technologies is in deep financial trouble, which has led to Moody’s Investors Service downgrading its corporate family rating and probability of default rating from Caa1 to Caa2.
In the Moody’s rating scale, Caa is deep in sub-investment grade territory and is classified as poor quality and very high credit risk.
This comes after Moody’s downgraded Liquid from B3 to Caa1 on 4 June 2024 with a negative outlook, moving it from a status of “highly speculative” to “substantial risks”.
Fitch soon followed suit, downgrading the company’s credit rating from B to CCC+ on 11 July 2024, warning that Liquid could fail to execute on a plan to raise enough cash to cover its debts.
On 11 November 2025, Moody’s delivered a further downgrade, saying it reflects its increasing concerns over Liquid Telecom’s ability to refinance its upcoming debt maturities in February and September 2026.
The agency said its rating took into account Liquid’s strong market position as the largest pan-African fibre network covering more than 20 countries across central, Eastern and Southern Africa.
It also factored in Liquid’s exposure to supportive industry dynamics, given the growing demand for carrier and enterprise broadband services across Africa.
Additionally, Moody’s said its rating considers Liquid’s long-standing contractual relationships with a blue-chip customer base with moderate customer concentration and low customer churn.
Despite this, Liquid’s outstanding debts continue to be a concern. As of August 2025, Liquid had $131 million (R2.27 billion) outstanding under a rand-denominated term loan due in February 2026.
Alongside this is a $620 million (R10.7 billion) bond maturing in September 2026. The covenants relevant to these loans are net leverage ratio, interest cover, and debt service cover ratio.
In its half-year results released on 23 October for the period ended 31 August 2025, Liquid disclosed that its net debt to adjusted EBITDA ratio was 3.45×, compared to the covenant of 3.50×.
It defines adjusted EBITDA as earnings before interest, taxation, depreciation, impairment, and amortisation, which is presented before recognising several items.
Those items excluded from adjusted EBITDA are dividends, restructuring costs, net foreign exchange losses and gains, and hyperinflation monetary gain.
“Over the past two years, the company has actively pursued a strategy to reduce leverage through asset sales and equity injections,” stated Moody’s.
“Liquid Telecom aims to reduce debt and support the refinancing of a smaller, more sustainable debt structure.” Moody’s said it viewed the company’s existing debt as unsustainably high.
Moody’s explained that, because of the current high interest rate environment, Liquid will get much higher rates on any new debt compared to what it currently pays on its bond.
“The $620 million senior secured notes have a coupon of 5.5%. Materially higher rates will put pressure on the company’s ability to generate free cash flow,” Moody’s said.
This will lead to a weakening of Liquid’s interest coverage ratio to below 1x when excluding EBITDA and capex from Zimbabwe. The ratio is defined as EBITDA less capex, divided by interest expense.
Liquid’s risky rescue plan
“Liquid Telecom is aiming to raise a total of $185 million of equity, to be used to repay debt and bolster its cash balance,” the ratings agency said.
“While the company has made some progress towards this plan, there have been repeated delays to milestones and so far, the company has succeeded in raising only $60 million.”
It plans to raise a further $100 million from asset sales in the wider Cassava group, outside of the Liquid Telecom bond perimeter and to inject it into the company.
“Cassava group has secured commitments from an investor in this regard, but completion of the transaction remains subject to completion of certain conditions precedent,” Moody’s stated.
“We understand the company also has plans to raise another $25 million of equity in short order.”
Regarding refinancing its debt, Liquid has secured a $220 million equivalent commitment from a lender to refinance its February 2026 loan maturity.
However, this commitment remains contingent on Liquid Telecom successfully completing a planned $125 million equity raise.
“The limited time remaining before maturity of the loan to finalise the two separate equity transactions introduces uncertainty and heightens the risk of a payment default should further delays occur,” Moody’s warned.
Liquid has also announced its refinancing strategy for the $620 million bond maturing in September 2026.
That plan includes repaying $170 million through equity proceeds and refinancing the remaining $450 million via a combination of commercial loans and a bond.
Moody’s said that although discussions with lenders and investors are underway, the execution of this plan remains dependent on refinancing its rand-denominated term loan.
Material going concern risk
Prior to the Moody’s downgrade, Liquid noted in its half-year results that there were material risks to the future of the company.
“Despite the progress made on the refinancing project, it is not yet complete. Whilst the directors expect this to happen in the going concern period, there nonetheless remains a material uncertainty,” it stated.
That uncertainty includes the quantum and timing of the completion of the refinancing project associated with its $620 million bond due in September 2026.
“Without the conclusion of the refinancing project, the group will not have the ability to repay, given its current cash and liquidity constraints,” Liquid said.
Should Liquid fail to raise the necessary funds, it would trigger the “downside scenario”, which would require mitigating action to be taken.
“These mitigating actions may include for example, the reduction of operating and capital expenditure and a continuing focus on working capital management, particularly in the collection cycle for receivables balances,” it said.
“These mitigating actions are not fully contemplated in the directors’ forecasts nor are they fully in the control of the directors.”
Therefore, if this downside scenario were to occur, and trading were to also deteriorate after mitigating actions, Liquid would need to approach its creditors.
“The directors would need to obtain consent for a waiver from certain lenders, which is outside of their control as at the date of signing these financial statements,” the company said.
MyBroadband contacted Liquid for comment, and it declined to answer questions about whether it was in financial crisis or add additional context to its going concern warning.
“We are aware of Moody’s revised rating on the company’s bond due September 2026. We cannot comment on the merits of their decision,” a Liquid spokesperson told MyBroadband.
“Our debt refinancing plans are progressing well with the significant milestones that we have recently announced to the market. We will communicate to the market as we complete the rest of our refinancing plan.”
Source: Mybroadband
