Credit rating agency Standard and Poors has warned that the AMC Entertainment chain is in danger of defaulting on its debt due to the ongoing COVID-19 pandemic.

S&P issued the bleak warning Friday as part of a downgrade in the company’s credit rating from CCC+ to CCC-, moving into the junk bond category, and cited the ongoing struggles in the exhibition industry. Major studios have been delaying high-profile releases in North America in the wake of a downbeat performance by Christopher Nolan’s “Tenet” — which took in only $3.4 million in its fourth weekend amid reluctance by many moviegoers to attend.

“The ongoing coronavirus pandemic will continue to have an impact on theater attendance and consumer behavior into 2021,” S&P said. “We anticipate that global cinema attendance will recover much more slowly in the fourth quarter of 2020 than we had previously expected and now expect the impact of COVID-19 on theater attendance to last well into 2021.”

“Given our expectations for a high rate of cash burn, we believe the company will run out of liquidity within the next six months unless it is able to raise additional capital, which we view as unlikely, or attendance levels materially improve,” the agency said. “We believe a liquidity crisis is all but inevitable even if the company were to fully re-open all of its theaters. We think cinema attendance will remain constrained by consumers’ health and safety concerns and social-distancing measures until an effective treatment or vaccine becomes widely available — which could be around mid-2021 — and will not recover to 2019 levels until 2022.”

“In addition, any potential second wave of the virus this winter could force AMC to reclose its theaters,” they continued. “Although unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and its cash generation improved following a stronger recovery in cinema attendance and operating performance than we currently expect.”

Currently, about 75% of U.S. theater markets are open, but the key Los Angeles and New York markets remain closed along with most of California, North Carolina, Michigan, New Mexico, Seattle-Tacoma and Portland, except for drive-ins. Paul Dergarabedian, senior media analyst with Comscore, estimated that only 58% of theaters are currently open in North America.

On July 10, AMC reached a debt agreement with Silver Lake Group agreeing to purchase $100 million in first lien notes, adding to the $600 million in convertible bonds that it already holds in AMC. The company, which is the world’s largest theater chain, said in public filings that it will raise $200 million in cash by allowing debt-holders to swap their securities at a discount. AMC also said at that point that renegotiating its debt will help it manage to stay solvent through 2021.