The Cineworld stock performance for Wednesday took an upward turn after a credit ratings upgrade from Moody’s. Cineworld Group’s corporate family rating was upgraded from Caa2 to Caa3, with outlook set at negative, to reflect its improved liquidity position.
Cineworld’s liquidity got a boost via the issuance of a $110.8m bond, which staved off a default of a due December 2020 payment of a fully drawn $111 million incremental revolving credit facility.
Cineworld’s share price also got an uplift from Fitch’s additional upgrade, which raised its default rating from CCC- to CCC. The company could be on course to get a $750 million lifeline from the CARES Act, providing much-needed operational funds as the lockdowns continue to force the closure of movie theatres.
Cineworld share price’s 5.08% move came off a gap and bounce on the ascending channel border. The 2 September high at 64.96 is the immediate resistance facing this upside move. A break of this area is required to send Cineworld share price to 69.34, with 72.86 (25 June and 3 December highs) and 77.20 forming the near term targets to the north.
On the flip side, a rejection at the current resistance, where the intraday top lies, allows for a pullback to the 58.04 support level. Only a breakdown of the channel’s lower boundary and the 58.04 support would enable Cineworld to target 52.64 (April and May 2020 lows). The 18-20 August lows at 44.94 also form an additional barrier to the south.
