Liquid Intelligent Technologies is currently facing significant financial challenges, prompting Moody’s Investors Service to downgrade its corporate family rating and probability of default rating from Caa1 to Caa2.
According to Moody’s rating scale, a Caa designation indicates poor quality and very high credit risk, placing the company firmly in sub-investment-grade territory. This latest downgrade marks a shift from the previous rating of B3 to Caa1 on June 4, 2024, which recategorised Liquid from “highly speculative” to “substantial risks.”
Subsequently, on July 11, 2024, Fitch Ratings lowered Liquid’s credit rating from B to CCC+. The agency expressed concerns that Liquid may struggle to execute its plan for generating sufficient cash to manage its debts.
On November 11, 2025, Moody’s issued another downgrade, expressing growing concerns about Liquid Telecom’s ability to refinance its upcoming debt maturities in February and September 2026. Despite these downgrades, Moody’s acknowledged Liquid’s established market position as the leading pan-African fibre network, spanning over 20 countries in Central, Eastern, and Southern Africa. The agency also highlighted the favourable industry dynamics, fueled by a rising demand for carrier and enterprise broadband services across the continent.
Moreover, Liquid benefits from long-lasting contractual relationships with a robust customer base characterised by moderate concentration and low churn rates. Nevertheless, the company’s mounting debts present a significant concern. As of August 2025, Liquid had US$131 million outstanding on a rand-denominated term loan due in February 2026, in addition to a US$620 million bond maturing in September 2026. The covenants connected to these loans include net leverage ratio, interest cover, and debt service cover ratio.
In its half-year results released on October 23 for the period ending August 31, 2025, Liquid reported a net debt-to-adjusted EBITDA ratio of 3.45×, slightly below the covenant of 3.50×. Adjusted EBITDA here is defined as earnings before interest, taxes, depreciation, impairment, and amortisation, excluding items such as dividends, restructuring costs, and net foreign exchange losses and gains.
Moody’s reported that over the past two years, Liquid has actively worked to lower its leverage through asset sales and equity injections. The company is looking to reduce its debt and refinance into a more manageable, sustainable debt structure. However, Moody’s flagged that the current high-interest-rate environment means any new debt will likely be priced much higher, exacerbating Liquid’s financial difficulties.
The existing US$620 million senior secured notes carry a coupon of 5.5%, and notably higher rates could significantly impact the company’s ability to generate free cash flow. Moody’s warned that this could weaken Liquid’s interest coverage ratio to below 1x if EBITDA and capital expenditures from Zimbabwe are excluded.
Liquid Telecom is seeking to raise $185 million in equity to reduce debt burdens and enhance its cash reserves. Despite some progress, the company has experienced delays in meeting milestones and has secured only US$60 million thus far. Additionally, it aims to raise an additional US$100 million from asset sales within the broader Cassava group, with financing commitments from investors pending the fulfilment of certain conditions.
The company is also looking to raise an additional US$25 million in equity in the near future. To refinance its debt, Liquid has obtained a US$220 million commitment from a lender to cover its February 2026 loan maturity. However, this commitment is contingent upon the successful completion of a planned US$125 million equity raise.
The limited time left before the loan’s maturity adds uncertainty and increases the risk of default if further delays occur. Liquid has also outlined a refinancing strategy for the US$620 million bond due in September 2026, which involves repaying US$170 million through equity proceeds and financing the remaining US$450 million via a mix of commercial loans and another bond issuance. Although discussions with lenders and investors are ongoing, the execution of this strategy is heavily dependent on refinancing its rand-denominated term loan.
