/raid1/www/Hosts/bankrupt/TCREUR_Public/200430.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Thursday, April 30, 2020, Vol. 21, No. 87
Headlines
F I N L A N D
AMER SPORTS: Bank Debt Trades at 24% Discount
WATERWORKS BIDCO: Bank Debt Trades at 17% Discount
F R A N C E
ALVEST SASU: Bank Debt Trades at 16% Discount
BUFFALO GRILL: Bank Debt Trades at 50% Discount
CASPER BIDCO: Bank Debt Trades at 17% Discount
CASPER BIDCO: Bank Debt Trades at 18% Discount
CASSINI SAS: Bank Debt Trades at 32% Discount
CFT MN: Bank Debt Trades at 18% Discount
CHRYSO SASU: Bank Debt Trades at 23% Discount
DRY MIX: Bank Debt Trades at 16% Discount
ELIS S.A.: Moody's Affirms Ba2 CFR, Alters Outlook to Negative
ELITECH GROUP: Bank Debt Trades at 17% Discount
ELITECH GROUP: Bank Debt Trades at 18% Discount
EVEREST BIDCO: Bank Debt Trades at 20% Discount
GROUPE MAISONS: Bank Debt Trades at 20% Discount
GYMSPA SAS: Bank Debt Trades at 16% Discount
GYMSPA SAS: Bank Debt Trades at 18% Discount
HCO FRANCE: Bank Debt Trades at 19% Discount
HOLDING SOCOTEC: Bank Debt Trades at 21% Discount
IMV TECHNOLOGIES: Bank Debt Trades at 17% Discount
IMV TECHNOLOGIES: Bank Debt Trades at 20% Discount
MALTEM CONSULTING: Bank Debt Trades at 16% Discount
OBOL FRANCE: Bank Debt Trades at 18% Discount
ROSE INVEST: Bank Debt Trades at 17% Discount
SEPUR SASU/FRANCE: Bank Debt Trades at 18% Discount
SEQENS GROUP: Bank Debt Trades at 29% Discount
SISAHO INTERNATIONAL: Bank Debt Trades at 15% Discount
SOCIETE EDITRICE: Bank Debt Trades at 16% Discount
SOLINA FRANCE: Bank Debt Trades at 17% Discount
TECHNICOLOR SA: Bank Debt Trades at 17% Discount
TECHNICOLOR SA: Bank Debt Trades at 28% Discount
THOM EUROPE: Bank Debt Trades at 20% Discount
UNIFIN SAS: Bank Debt Trades at 19% Discount
G E R M A N Y
CIDRON GLORIA: Moody's Affirms B2 CFR, Alters Outlook to Negative
KAEFER ISOLIERTECHNIK: Moody's Cuts CFR to B1, Outlook Stable
TAKKO FASHION: S&P Lowers Rating to 'CCC+' on COVID-19 Uncertainty
[*] GERMANY: Half of German Firms Won't Survive 6-Month Lockdown
I R E L A N D
CIFC EUROPEAN II: Fitch Gives 'B-sf' Rating to Class F Notes
CIFC EUROPEAN II: Moody's Gives B3 Rating to Class F Notes
MADISON PARK XV: Fitch Gives B-sf Rating on Class F Debt
I T A L Y
LEONARDO SPA: S&P Alters Outlook to Stable & Affirms 'BB+/B' Rating
REKEEP SPA: S&P Alters Outlook to Negative & Affirms 'B' ICR
K A Z A K H S T A N
KAZAKH AGRARIAN: S&P Withdraws 'BB/B' Issuer Credit Ratings
L U X E M B O U R G
ASTON FINCO: Bank Debt Trades at 16% Discount
AURIS LUXEMBOURG: Bank Debt Trades at 29% Discount
CCP LUX: S&P Affirms 'B' Issuer Credit Rating, Outlook Stable
CORESTATE CAPITAL: S&P Alters Outlook to Stable & Affirms BB+ ICR
CURIUM BIDCO: Bank Debt Trades at 25% Discount
KIWI VFS: Moody's Cuts CFR to B2 & Alters Outlook to Negative
PI LUX: Bank Debt Trades at 27% Discount
SWISSPORT FINANCING: Bank Debt Trades at 31% Discount
N E T H E R L A N D S
BRIGHT BIDCO: Bank Debt Trades at 69% Discount
CREDIT EUROPE: Moody's Cuts LT Deposit Rating to Ba3, Outlook Neg.
DEMIR-HALK BANK: Moody's Affirms Ba1 Deposit Rating, Outlook Neg.
GARANTIBANK INT'L: Moody's Affirms Ba1 Deposit Rating, Outlook Neg.
KETER GROUP: Bank Debt Trades at 25% Discount
Q-PARK HOLDING: Moody's Cuts CFR to Ba3 & Alters Outlook to Neg.
R U S S I A
NCSP GROUP: S&P Affirms 'BB' Rating, Outlook Pos.
RN BANK: S&P Affirms BB+/B ICR Amid COVID-19 Containment Measures
STATE TRANSPORT: S&P Alters Outlook to Neg. & Affirms 'BB/B' ICR
[*] Moody's Takes Action on 4 Russian Banks on Coronavirus Outbreak
S P A I N
AERNNOVA AEROSPACE: Bank Debt Trades at 21% Discount
AERNNOVA AEROSPACE: Bank Debt Trades at 22% Discount
AERNNOVA AEROSPACE: Fitch Affirms B+ IDR, Alters Outlook to Neg.
DORNA SPORTS: Bank Debt Trades at 25% Discount
GRUPO NEGOCIOS: Bank Debt Trades at 17% Discount
IMAGINA MEDIA: Bank Debt Trades at 16% Discount
IMAGINA MEDIA: Bank Debt Trades at 37% Discount
PIOLIN BIDCO: Bank Debt Trades at 21% Discount
PROMOTORA DE: Bank Debt Trades at 22% Discount
PROMOTORA DE: Bank Debt Trades at 24% Discount
SENA DIRECTORSHIP: Bank Debt Trades at 16% Discount
[*] Moody's Takes Action on 4 Spanish Banks on Coronavirus Outbreak
S W I T Z E R L A N D
BREITLING HOLDINGS: S&P Cuts CHF564MM Term Loan Rating to 'B-'
T U R K E Y
ANTALYA METROPOLITAN: Fitch Affirms LT IDRs at BB-, Outlook Stable
U K R A I N E
UKRAINE: Fitch Affirms 'B' LT IDR, Alters Outlook to Stable
U N I T E D K I N G D O M
BLACKMORE BOND: FCA Warned 3 Years Ago of Misleading Marketing
CPUK FINANCE: Fitch Places 'B' Class B Notes Rating on Watch Neg.
ELYSIUM HEALTHCARE: Bank Debt Trades at 18% Discount
GEORGE BEST: Enters Into Administration Following Delays
INTERSERVE PLC: Administration Work Extended Until March 2022
L1R HB: Moody's Cuts CFR & Sr. Sec. Credit Facility Rating to 'Caa1
LIBERTY SIPP: Enters Administration Following Insolvency
PUNCH TAVERNS: Moody's Cuts Class A7 Notes Rating to B1
RADNORSHIRE ARMS: Bought Out of Administration by Allworks
RAY CAR: Bank Debt Trades at 24% Discount
VUE INTERNATIONAL: Bank Debt Trades at 28% Discount
X X X X X X X X
ARVOS HOLDING: Bank Debt Trades at 30% Discount
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F I N L A N D
=============
AMER SPORTS: Bank Debt Trades at 24% Discount
---------------------------------------------
Participations in a syndicated loan under which Amer Sports Holding
Oy is a borrower were trading in the secondary market around 76
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR1700 million term loan is scheduled to mature on April 1,
2026. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Finland.
WATERWORKS BIDCO: Bank Debt Trades at 17% Discount
--------------------------------------------------
Participations in a syndicated loan under which Waterworks Bidco Oy
is a borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR120 million term loan is scheduled to mature on November 30,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Finland.
===========
F R A N C E
===========
ALVEST SASU: Bank Debt Trades at 16% Discount
---------------------------------------------
Participations in a syndicated loan under which Alvest SASU is a
borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD235 million term loan is scheduled to mature on October 26,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
BUFFALO GRILL: Bank Debt Trades at 50% Discount
-----------------------------------------------
Participations in a syndicated loan under which Buffalo Grill SADIR
is a borrower were trading in the secondary market around 50
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR200 million term loan is scheduled to mature on January 31,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
CASPER BIDCO: Bank Debt Trades at 17% Discount
----------------------------------------------
Participations in a syndicated loan under which Casper Bidco SASU
is a borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR55 million term loan is scheduled to mature on July 30,
2026. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
CASPER BIDCO: Bank Debt Trades at 18% Discount
----------------------------------------------
Participations in a syndicated loan under which Casper Bidco SASU
is a borrower were trading in the secondary market around 82
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR155 million term loan is scheduled to mature on July 30,
2027. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
CASSINI SAS: Bank Debt Trades at 32% Discount
---------------------------------------------
Participations in a syndicated loan under which Cassini SAS is a
borrower were trading in the secondary market around 68
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR141 million term loan is scheduled to mature on March 28,
2026. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
CFT MN: Bank Debt Trades at 18% Discount
----------------------------------------
Participations in a syndicated loan under which CFT MN SASU is a
borrower were trading in the secondary market around 82
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR53 million term loan is scheduled to mature on June 30,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
CHRYSO SASU: Bank Debt Trades at 23% Discount
---------------------------------------------
Participations in a syndicated loan under which Chryso SASU is a
borrower were trading in the secondary market around 77
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR260 million term loan is scheduled to mature on June 30,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
DRY MIX: Bank Debt Trades at 16% Discount
-----------------------------------------
Participations in a syndicated loan under which Dry Mix Solutions
Investissements SAS is a borrower were trading in the secondary
market around 84 cents-on-the-dollar during the week ended Fri.,
April 24, 2020, according to Bloomberg's Evaluated Pricing service
data.
The EUR865 million term loan is scheduled to mature on March 15,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
ELIS S.A.: Moody's Affirms Ba2 CFR, Alters Outlook to Negative
---------------------------------------------------------------
Moody's Investors Service has affirmed Elis S.A.'s ratings
including the Ba2 corporate family rating, the Ba2-PD probability
of default rating, the (P)Ba2 rating on the EUR3 billion backed
Euro Medium Term Note programme, and the Ba2 ratings on the backed
senior unsecured notes. The outlook has been changed to negative
from positive.
"Its rating action reflects the impact that confinement measures
will have on Elis' operating performance in 2020, notably in its
Hospitality and Trade and Services segments", says Eric Kang, a
Moody's Vice President and lead analyst on Elis. "As a result,
Elis' Moody's-adjusted credit metrics will most likely be outside
its guidance to maintain the Ba2 CFR in 2020 with a swift recovery
in 2021 potentially hindered by longer lasting effects of the
coronavirus outbreak on some of the company's end markets, notably
in hospitality", adds Mr Kang.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Assuming confinement measures in Elis' key geographies are
gradually lifted in May or June 2020, Moody's expects the company's
Moody's-adjusted debt/EBITDA to increase to around 4.5x in 2020
from 3.7x in 2019 (post IFRS16), which will be above the
requirement to maintain the Ba2 CFR. On the other hand, the
cancellation of the dividend for 2019 could support a slight
increase of Moody's-adjusted free cash flow/debt in 2020 from 1.8%
in 2019 and is indicative of the company's conservative financial
policies and support of key financial metrics.
Moody's forecasts (i) assume a slower recovery in its hospitality
end market compared to Elis' other end markets because of the high
risk that travel restrictions will remain in place for a certain
period of time after confinement measures are lifted, and (ii)
incorporate governmental measures such as partial unemployment
benefits and other initiatives, that the company will undertake to
reduce its cost base and protect cash flow.
While Moody's expects Elis' credit metrics to improve in 2021 as
market conditions normalize, there is a risk that the economic
fallout of the coronavirus outbreak will have a longer lasting
impact on demand for Elis' services, potentially hindering a
recovery of the company's credit metrics.
Prior to the coronavirus outbreak, Elis' operating performance in
2019 was in line with Moody's expectations. Organic revenue growth
of 3.3% and stable margins, despite higher personnel and energy
costs, led to a reduction of Moody's-adjusted debt/EBITDA to 3.7x
(post IFRS16; c.3.5x pre IFRS16) from 3.9x (pre IFRS16) in 2018
while Moody's-adjusted free cash flow/debt improved to 1.8% (post
IFRS16; c.1.9% pre IFRS16) from 1.6% (pre IFRS16) in 2018. Moody's
previously expected Moody's-adjusted free cash flow/debt to
increase to around 4%-5% in 2020 because of a normalization of
capex levels following a period of catch-up investment in the UK.
LIQUIDITY
Moody's views Elis' liquidity as adequate. As of December 31, 2019,
the company had cash balances of EUR171 million Its revolving
credit facilities of EUR500 million and EUR400 million were
undrawn, although these committed facilities provide a backup for
the EUR500 million commercial paper programme, of which EUR390
million was outstanding as of December 31, 2019.
Excluding the commercial paper programme which is short-term in
nature, the next largest debt maturity is in 2023 when the EUR650
million notes, and the EUR365 million convertible notes mature. The
EUR500 million RCF expires in January 2022, while the EUR400
million RCF expires in 2023.
The company obtained a waiver for the covenant test as of June 30,
2020 but a slower recovery in the Hospitality segment as described
by Moody's above may require the company to seek another waiver for
the test as of December 31, 2019. This covenant - which applies to
the RCFs and the US private placement (USPP) debt - is a net
leverage financial maintenance covenant tested semi-annually. It is
set at 3.75x compared to a ratio of 3.2x as of December 31, 2019.
STRUCTURAL CONSIDERATIONS
The (P)Ba2 unsecured rating of the EMTN programme as well as the
Ba2 instrument ratings on the EUR650 million EMTN notes due 2023
and EUR350 million EMTN notes due 2026 are at the same level as the
Ba2 CFR. The EMTN notes and the high-yield notes have a pari passu
ranking alongside Elis' other bank facilities. All these facilities
are unsecured and have a weak level of guarantee from operating
companies.
RATING OUTLOOK
The negative outlook reflects the risk that Elis' credit metrics
will not revert to levels more commensurate with a Ba2 CFR in 2021
because of a longer lasting impact of the coronavirus outbreak on
some of the company's end markets, notably in hospitality.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could take negative rating action on Elis' ratings if a
prolonged weakness in demand results in a further deterioration in
credit metrics and liquidity compared to Moody's current
expectations as outlined above. Quantitively, downward rating
pressure could materialize if (1) Moody's-adjusted debt/EBITDA
remains sustainably above 4.0x, (2) Moody's-adjusted free cash
flow/debt weakens towards 1% or below on a sustainable basis, or
(3) its liquidity position deteriorates including Moody's
expectation that Elis will not be able to meet, or waive its
maintenance covenant.
Upward rating pressure is unlikely to arise until the coronavirus
outbreak is brought under control and market conditions normalize.
Over time, positive rating pressure could develop if (1)
Moody's-adjusted debt/EBITDA sustainably decreases to below 3.5x,
(2) Moody's-adjusted free cash flow/debt increases to above 5% on a
sustained basis, and (3) the company maintains a good liquidity
position including ample covenant headroom.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
COMPANY PROFILE
Elis is a France-based multiservice provider of flat linen, garment
and washroom appliances, water fountains, coffee machines, dust
mats and pest control services. The company reported revenue of
EUR3.3 billion in 2019.
ELITECH GROUP: Bank Debt Trades at 17% Discount
-----------------------------------------------
Participations in a syndicated loan under which ELITech Group SAS
is a borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR68 million term loan is scheduled to mature on July 19,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
ELITECH GROUP: Bank Debt Trades at 18% Discount
-----------------------------------------------
Participations in a syndicated loan under which ELITech Group SAS
is a borrower were trading in the secondary market around 82
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD100 million term loan is scheduled to mature on July 19,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
EVEREST BIDCO: Bank Debt Trades at 20% Discount
-----------------------------------------------
Participations in a syndicated loan under which Everest Bidco SASU
is a borrower were trading in the secondary market around 80
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR500 million term loan is scheduled to mature on July 1,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
GROUPE MAISONS: Bank Debt Trades at 20% Discount
------------------------------------------------
Participations in a syndicated loan under which Groupe Maisons de
Famille SA is a borrower were trading in the secondary market
around 80 cents-on-the-dollar during the week ended Fri., April 24,
2020, according to Bloomberg's Evaluated Pricing service data.
The EUR50 million term loan is scheduled to mature on October 20,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
GYMSPA SAS: Bank Debt Trades at 16% Discount
--------------------------------------------
Participations in a syndicated loan under which Gymspa SAS is a
borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR13 million term loan is scheduled to mature on October 20,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
GYMSPA SAS: Bank Debt Trades at 18% Discount
--------------------------------------------
Participations in a syndicated loan under which Gymspa SAS is a
borrower were trading in the secondary market around 82
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR13 million term loan is scheduled to mature on October 20,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
HCO FRANCE: Bank Debt Trades at 19% Discount
--------------------------------------------
Participations in a syndicated loan under which HCo France SAS is a
borrower were trading in the secondary market around 81
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR260 million term loan is scheduled to mature on January 15,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
HOLDING SOCOTEC: Bank Debt Trades at 21% Discount
-------------------------------------------------
Participations in a syndicated loan under which Holding Socotec SAS
is a borrower were trading in the secondary market around 79
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The GBP50 million term loan is scheduled to mature on July 27,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
IMV TECHNOLOGIES: Bank Debt Trades at 17% Discount
--------------------------------------------------
Participations in a syndicated loan under which IMV Technologies
SADIR is a borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR40 million term loan is scheduled to mature on June 9, 2023.
As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
IMV TECHNOLOGIES: Bank Debt Trades at 20% Discount
--------------------------------------------------
Participations in a syndicated loan under which IMV Technologies
SADIR is a borrower were trading in the secondary market around 80
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR40 million term loan is scheduled to mature on December 9,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
MALTEM CONSULTING: Bank Debt Trades at 16% Discount
---------------------------------------------------
Participations in a syndicated loan under which Maltem Consulting
Group SAS is a borrower were trading in the secondary market around
84 cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR4 million term loan is scheduled to mature on March 21,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
OBOL FRANCE: Bank Debt Trades at 18% Discount
---------------------------------------------
Participations in a syndicated loan under which Obol France 3 SAS
is a borrower were trading in the secondary market around 82
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR960 million term loan is scheduled to mature on April 12,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
ROSE INVEST: Bank Debt Trades at 17% Discount
---------------------------------------------
Participations in a syndicated loan under which Rose Invest 2 is a
borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR5 million term loan is scheduled to mature on March 31,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
SEPUR SASU/FRANCE: Bank Debt Trades at 18% Discount
---------------------------------------------------
Participations in a syndicated loan under which Sepur SASU/France
is a borrower were trading in the secondary market around 82
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR5 million term loan is scheduled to mature on December 15,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
SEQENS GROUP: Bank Debt Trades at 29% Discount
----------------------------------------------
Participations in a syndicated loan under which Seqens Group Bidco
SASU is a borrower were trading in the secondary market around 71
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR22 million term loan is scheduled to mature on June 22,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
SISAHO INTERNATIONAL: Bank Debt Trades at 15% Discount
------------------------------------------------------
Participations in a syndicated loan under which Sisaho
International SAS is a borrower were trading in the secondary
market around 85 cents-on-the-dollar during the week ended Fri.,
April 24, 2020, according to Bloomberg's Evaluated Pricing service
data.
The EUR485 million term loan is scheduled to mature on November 8,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
SOCIETE EDITRICE: Bank Debt Trades at 16% Discount
--------------------------------------------------
Participations in a syndicated loan under which Societe Editrice du
Monde SA is a borrower were trading in the secondary market around
84 cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR20 million term loan is scheduled to mature on November 30,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
SOLINA FRANCE: Bank Debt Trades at 17% Discount
-----------------------------------------------
Participations in a syndicated loan under which Solina France SASU
is a borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR7 million term loan is scheduled to mature on December 17,
2022. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
TECHNICOLOR SA: Bank Debt Trades at 17% Discount
------------------------------------------------
Participations in a syndicated loan under which Technicolor SA is a
borrower were trading in the secondary market around 83
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR450 million term loan is scheduled to mature on December 23,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
TECHNICOLOR SA: Bank Debt Trades at 28% Discount
------------------------------------------------
Participations in a syndicated loan under which Technicolor SA is a
borrower were trading in the secondary market around 72
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR275 million term loan is scheduled to mature on December 31,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
THOM EUROPE: Bank Debt Trades at 20% Discount
---------------------------------------------
Participations in a syndicated loan under which THOM Europe SAS is
a borrower were trading in the secondary market around 80
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR565 million term loan is scheduled to mature on July 31,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
UNIFIN SAS: Bank Debt Trades at 19% Discount
--------------------------------------------
Participations in a syndicated loan under which Unifin SAS is a
borrower were trading in the secondary market around 81
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR305 million term loan is scheduled to mature on October 24,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is France.
=============
G E R M A N Y
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CIDRON GLORIA: Moody's Affirms B2 CFR, Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating and the B2-PD probability of default rating at the level of
Cidron Gloria Holding GmbH. Concurrently, Moody's has affirmed the
B2 rating of the EUR360 million senior secured term loan maturing
2026 and the B2 rating of the EUR80 million senior secured
revolving credit facility maturing 2026, both issued by GHD
Verwaltung GesundHeits GmbH Deutschland, a subsidiary of Cidron
Gloria Holding GmbH. The outlook on both entities has been changed
to negative from stable.
its rating action reflects the fact that the operating performance
of the company during the second half of 2019 in terms of organic
growth, margin development and free cash flow generation was behind
Moody's expectations. This counter operating performance coupled
with a rating weakly positioned at the outset following the
refinancing in July 2019 resulted in increasing downward pressure
on the rating.
RATINGS RATIONALE
The ratings are supported by (1) GHD's leading position (according
to the company) in the medical homecare market in Germany, (2)
barriers to entry, supported by GHD's large and well-spread network
of licensed nurses and its long-term relationships with health
insurance companies, hospitals and patients, (3) positive
underlying fundamental trends, which drive demand for homecare
medical services and products and (4) patient loyalty, providing an
effective backlog of revenue.
Conversely, the ratings are constrained by (1) GHD's high leverage,
(2) the lack of geographic diversification which exposes the
company to change in regulation, macro-economic trends or other
country-specific topics, (3) continuous pricing pressure from
health insurance companies reimbursing most of GHD's product and
services which constraints margins and (4) low cash balance of EUR5
million as of February 2020 in particular driven by ongoing working
capital build up.
As of, GHD's operations have not been materially affected by the
coronavirus outbreak and the company continues to deliver its
products and devices to patients' homes. Thanks to its wide and
loyal end-customer base of around 1 million patients, the fact that
all products are reimbursed by health insurances and the critical
nature of the products provided, Moody's believes that GHD is
relatively resilient to a downside scenario.
The B2 rating is conditional to the fact that during the next 12-18
months, the company will manage to grow revenue organically,
improve margin and generate positive FCF notably thanks to an
improvement in working capital management.
OUTLOOK
The negative outlook reflects the execution risks associated with
the operating improvement required to maintain the rating in the
current B2 category. The required operating improvement notably
include improvement in organic growth, margin increase and positive
FCF generation.
LIQUIDITY
GHD's liquidity is just adequate driven by (1) EUR5 million of cash
on balance only as of February 2020 (1% of revenue), (2) a EUR80
million RCF, out of which EUR23 million are drawn as of February
2020 and EUR3 million are used for bank guarantees, and (3)
long-dated debt maturities with the term loan and the RCF maturing
in 2026.
The RCF is subject to a springing covenant (net leverage to be
below 11.15x) tested if the RCF is drawn by more than 40%. As of
February 2020, the net debt leverages as calculated by the company,
was 6.72x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook, an upgrade is unlikely in the
short-term. However, upward pressure could arise if GHD's:
- Leverage, as measured by its Moody's-adjusted debt/EBITDA, were
to decrease materially and sustainably below 5.0x
- Moody's-adjusted EBITA/interest expense were to increase above
3.0x
- Moody's-adjusted FCF were to be positive for sustained period
of time
Downward pressure on the rating could arise if:
- GHD's leverage, as measured by its Moody's-adjusted
debt/EBITDA, were to remain above 6.0x for a prolonged period of
time
- Its Moody's-adjusted EBITA/interest expense were to decrease
towards 2.0x
- Its FCF continue to be negative for a prolonged period
- Liquidity concerns were to emerge
STRUCTURAL CONSIDERATIONS
The probability of default at B2-PD incorporates its assumption of
a 50% recovery rate, reflecting GHD's debt structure, which is
composed of first-lien senior secured bank facilities with no
maintenance covenant. The B2 instrument rating on the bank
facilities is in line with the CFR in the absence of any
significant liabilities ranking ahead or behind.
The instruments share the same security package and are guaranteed
by a group of companies representing at least 80% of the
consolidated group's EBITDA. The security package consists of
shares, bank accounts and intragroup receivables.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
PROFILE
Cidron Gloria Holding GmbH, headquartered in Germany, is a provider
of homecare medical services and a distributor of associated
medical devices/products for a broad range of therapeutic areas
including ostomy, incontinence, enteral nutrition, parental
nutrition, wound care and tracheostomy. Except for parental
nutrition and ostomy products, which the company also partially
manufactures in house, all the other devices/products that the
company distributes are sourced from third-party suppliers. GHD
generated EUR574 million revenue in 2019. The company has been
majority-owned by funds managed and advised by Nordic Capital since
August 2014.
KAEFER ISOLIERTECHNIK: Moody's Cuts CFR to B1, Outlook Stable
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Moody's Investors Service has downgraded the corporate family
rating of the German provider of insulation, access solutions,
surface protection and passive fire protection services KAEFER
Isoliertechnik GmbH & Co. KG to B1 from Ba3 and the probability of
default rating to B1-PD from Ba3-PD. Concurrently, the instrument
rating on the EUR250 million Senior Secured Notes has been
downgraded to B2 from B1. The rating outlook is stable.
"Our decision to downgrade KAEFER's ratings reflects the material
deterioration in its operating environment and its expectation of
slower global macroeconomic growth with a deep recession in Europe
in 2020 following the coronavirus outbreak. Despite its large share
of recurring revenues from maintenance services, extreme
turbulences in the Oil & Gas sector in addition to the
coronavirus-induced disruptions will likely weaken the company's
credit metrics that it expects to remain well beyond the ranges
required for the previous rating in the coming 12-24 months", says
Vitali Morgovski, Moody's Assistant Vice President--Analyst and
lead analyst for KAEFER.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented, and it views them
as a social risk factor under its assessment of ESG
considerations.
Its rating action reflects Moody's belief that KAEFER will face
challenging operating conditions in many of its cyclical end
markets, most noticeably in Oil & Gas, where over 40% of the
group's revenue is generated. Coronavirus-induced lockdowns
introduced in many countries worldwide will disrupt supply chains,
complicate execution on existing projects and results in delays and
potential cancelations of new projects. Though, some projects the
company works on, for example in the Energy sector, are defined as
essential and critical. Furthermore, Moody's expects that the
global economic recession will reduce KAEFER's revenues and
earnings in 2020, leading to weaker credit metrics outside its
guided ranges for the previous rating. At the same time, the
company's recent acquisition of John Wood PLC's industrial services
business in the UK (announced in February 2020) has already
weakened its liquidity profile, which Moody's now views only as
adequate.
KAEFER's rating is supported by its broad geographic
diversification with operations spread over more than 30 countries
and also the diversification in terms of unrelated end markets.
Additionally, the relative resilience of its business profile
arises from a high share of recurring revenues (around 50%),
stemming from the long-running maintenance contracts, and its
flexible cost structure with limited maintenance capex requirements
and a high proportion of variable costs.
RATIONALE FOR STABLE OUTLOOK
The stable outlook reflects Moody's expectation that KAEFER's
credit metrics might be weak if the economy does not recover in the
second half of this year, but would be expected to improve to
position the rating solidly in 2021. Furthermore, the current
rating is conditional upon KAEFER maintaining at least adequate
liquidity.
LIQUIDITY
Moody's considers KAEFER's liquidity as adequate, but relatively
weaker than in the last two years. At the end of September 2019,
the company had EUR117 million of cash, that Moody's expects to
have grown to around EUR135 million at the year-end 2019, as well
as around EUR100 million availability under EUR130 million
revolving credit facility, maturing in 2023. Moody's expects a
large part of available cash to be consumed by the payment for the
UK acquisition (EUR90 - EUR95 million) in Q1 2020 while the
potential negative free cash flow generation this year may increase
the drawing under RCF, which was upsized by EUR20 million to EUR150
million following the acquisition. However, Moody's anticipates
that KAEFER would keep its total available liquidity above EUR100
million also during the year. The current rating is as well based
on the expectation that the company will continue to preserve a
sufficient headroom under financial covenants under the RCF.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
WHAT COULD MOVE THE RATINGS - UP
Positive rating pressure could arise if:
- Moody's-adjusted gross debt/EBITDA below 4.0x on a sustained
basis
- Moody's-adjusted retained cash flow/ net debt above 15% on a
sustained basis
- Sustainably positive FCF generation
WHAT COULD MOVE THE RATINGS -- DOWN
Conversely, negative rating pressure could arise if:
- Moody's-adjusted debt/EBITDA increasing above 5.0x
- Moody's adjusted RCF/net debt declining below 10%
- Negative FCF generation leading to a deterioration in
liquidity
STRUCTURAL CONSIDERATIONS
In the Loss Given Default assessment for KAEFER, the group's EUR250
million senior secured notes rank behind the super senior EUR150
million RCF and EUR111 million trade payables as of September 2019.
This structural subordination of senior secured notes results in a
one-notch lower rating of B2 compared with the B1 corporate family
rating. The security package is a share pledge on subsidiaries
accounting for well over 80% of the group's EBITDA. Since it is
only a share pledge, weit modelled the debt instruments as
unsecured in the LGD analysis.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CORPORATE PROFILE
Headquartered in Bremen, Germany, KAEFER Isoliertechnik GmbH & Co.
KG (KAEFER) is a leading provider of IASP services, interior
outfitting and related after-sales services. Established by Carl
Kaefer in 1918, the company remains family owned and operates in
over 30 countries worldwide. It is among the top two companies in
Western Europe, Central and Eastern Europe, Asia Pacific, the
Middle East and Latin America. In the last twelve months to
September 2019, the company reported revenue of EUR1.8 billion.
TAKKO FASHION: S&P Lowers Rating to 'CCC+' on COVID-19 Uncertainty
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S&P Global Ratings lowered its ratings on Takko Fashion GmbH and
its senior secured debt to 'CCC+' from 'B-'.
The coronavirus outbreak in Europe is leading to a drop in group
sales in fiscal year ending Jan. 31, 2021.
Following the measures of several European governments to combat
COVID-19, Takko had to close most of its stores. Because the
contribution from e-commerce business is very minimal, S&P expects
a sales decline of up to 25% in the fiscal year ending Jan. 31,
2021 (FY 2021), corresponding to about one-quarter of revenues,
assuming the coronavirus outbreak abates in Europe in the second
quarter of the calendar year and that sales will recover somewhat
in the third quarter.
Despite cost-saving and cash-preservation measures, earnings and
cash flows will likely plummet in the current fiscal year. S&P
said, "Given the group's scale and well-established position in the
European apparel retail market, we believe that Takko could
temporarily achieve more favorable supplier-payment terms and rent
relief or deferrals on its mostly leased store base. The company
has also started a series of initiatives such as tight cost
control, has limited capital expenditure (capex) to necessary
projects only, and can benefit from temporary tax relief from the
government. At the same time, we believe that this will not be
sufficient to prevent a severe decline in earnings and cash flows
for FY 2021. We assume drastically subdued activity in the group's
operations for the next three months, and a slow pickup through the
third quarter of 2020. We expect S&P Global Ratings-adjusted EBITDA
will be 30%-35% below that in fiscal year-ended Jan. 31, 2019.
This, in our view, implies heightened risk of a breach of the
EUR110 million absolute EBITDA covenant, despite our expectation of
strong EBITDA as per the covenant definition of at least EUR145
million as of Jan. 31, 2020. Similarly, we believe the group will
report negative free operating cash flow of EUR10 million-EUR20
million for FY 2021."
Robust liquidity as of October 2019 will likely come under pressure
in the next few months. Takko reported EUR76.8 million of cash on
the balance sheet as of Oct. 31, 2019, in addition to about EUR62
million available on its revolving credit facility (RCF), which is
a relatively high point in light of the group's history supported
by the solid operating performance we estimate for fiscal year
2019. Also supporting liquidity is that the group has no short-term
debt, since the EUR71.4 million RCF and the EUR515 million notes
are due in November 2023. However, liquidity could still rapidly
deteriorate in S&P's view. The group's diminishing covenant
headroom makes it dependent on its pool of lenders for sufficient
liquidity over the next few months. Moreover, failure to obtain a
cancellation of rent payments and deferral of payments to suppliers
will likely weaken its liquidity cushion. Even if stores are
gradually reopened, the group's inherently fixed cost base leaves
very little room to support exceptional costs. Second, if social
distancing rules lead to lower than normal traffic in stores in the
next few months, S&P expects this to heighten liquidity pressures
further, since the second and third quarters are the most important
in terms of profitability and free operating cash flow.
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P
said, "Some government authorities estimate the pandemic will peak
about midyear, and we are using this assumption in assessing the
economic and credit implications. We believe the measures adopted
to contain COVID-19 have pushed the global economy into recession.
As the situation evolves, we will update our assumptions and
estimates accordingly."
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
S&P said, "The negative outlook reflects our view that the group's
ability to service its financial commitments could be further
strained if the current situation prevails for longer and causes
Takko's liquidity to weaken, increasing the risk of a distressed
exchange offer on any of the group's debt, or a conventional
default.
"In our view, the group will be able to partly offset the slowdown
in activity through a reduction in operating expenses and deferred
capex. This will result in adjusted debt to EBITDA materially
deviating from our previous base case of 6.5x-7.5x (4.5x-5.5x
excluding preferred equity certificates) and EBITDA plus rent
covering interest plus rent by around 1.4x. We will update our
expectations and forecasts as we receive more information."
Downside scenario
S&P could lower the rating if:
-- S&P believes the impact of COVID-19 and the resulting economic
weakness would lead to a material liquidity shortfall, or if it
foresaw a covenant breach materializing in the next 12 months; or
-- Amid the pandemic-related disruption, operating performance
were to weaken further, raising the risk of Takko undertaking a
transaction that we could view as a distressed exchange, a debt
restructuring, or a conventional default in the short term.
Upside scenario
S&P said, "We could raise our ratings or revise our outlook to
stable if we believe Takko's trading will likely return to normal
in the fiscal year to Jan. 31, 2021, which would require an
improvement in the macroeconomic situation. To raise our rating, we
would also need to be confident that the group's operating
performance has sustainably recovered to normal levels, and the
group can sustain its capital structure and adequate liquidity over
the medium term."
[*] GERMANY: Half of German Firms Won't Survive 6-Month Lockdown
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Justin Huggler at The Telegraph, citing a new survey, reports that
more than half of German businesses will not survive more than six
months of lockdown.
According to The Telegraph, around 52% of businesses surveyed told
Munich's Ifo Insitute they did not have the funds to keep trading
for more than six months under coronavirus restrictions.
A further 29% said they could not endure more than three months,
The Telegraph notes.
"These are worrying numbers that suggest a wave of bankruptcies is
on the way," The Telegraph quotes Klaus Wohlrabe of the Ifo as
saying.
Germany began to lift its lockdown when shops reopened last week,
but many restrictions remain in place, The Telegraph relates.
Restaurants, bars and entertainment venues are closed for the
foreseeable future, and a travel ban has brought the tourism
industry to a standstill, The Telegraph discloses.
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I R E L A N D
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CIFC EUROPEAN II: Fitch Gives 'B-sf' Rating to Class F Notes
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Fitch has assigned CIFC European Funding CLO II Designated Activity
Company final ratings as detailed below.
CIFC European Funding CLO II DAC
- Class A; LT AAAsf; New Rating
- Class B-1; LT AAsf; New Rating
- Class B-2; LT AAsf; New Rating
- Class C; LT Asf; New Rating
- Class D; LT BBB-sf; New Rating
- Class E; LT BBsf; New Rating
- Class F; LT B-sf; New Rating
- Subordinated notes; LT NRsf; New Rating
- Class Y; LT NRsf; New Rating
TRANSACTION SUMMARY
CIFC European Funding CLO II Designated Activity Company is a
securitisation of mainly senior secured obligations (at least 90%)
with a component of senior unsecured, mezzanine, second-lien loans,
first-lien last-out loans and high-yield bonds. Note proceeds were
used to fund a portfolio with a target par of EUR400 million. The
portfolio is be actively managed by CIFC CLO Management II LLC. The
collateralised loan obligation has a 4.5-year reinvestment period
and an 8.5-year weighted average life.
KEY RATING DRIVERS
'B' Portfolio Credit Quality: Fitch Ratings considers the average
credit quality of obligors to be in the 'B' category. The Fitch
weighted average rating factor of the identified portfolio is 33.
High Recovery Expectations: At least 90% of the portfolio will
comprise senior secured obligations. Fitch views the recovery
prospects for these assets as more favourable than for second-lien,
unsecured and mezzanine assets. The Fitch weighted average recovery
rate of the identified portfolio is 66.5%.
Diversified Asset Portfolio: The transaction has several Fitch test
matrices corresponding to top 10 obligors' concentration limits of
15% and 21%. The manager can interpolate within and between two
matrices. The transaction also includes various concentration
limits, including the maximum exposure to the three largest
(Fitch-defined) industries in the portfolio at 40%. These covenants
ensure the asset portfolio will not be exposed to excessive
concentration.
Portfolio Management: The transaction has a 4.5-year reinvestment
period and includes reinvestment criteria similar to those of other
European transactions. Fitch's analysis is based on a stressed-case
portfolio with the aim of testing the robustness of the transaction
structure against its covenants and portfolio guidelines.
Cash Flow Analysis: Fitch used a customised proprietary cash flow
model to replicate the principal and interest waterfalls and the
various structural features of the transaction, and to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par value and interest coverage
tests.
RATING SENSITIVITIES
This section provides insight into the model-implied sensitivities
the transaction faces when one assumption is modified, while
holding others equal. The modelling process uses the modification
of these variables to reflect asset performance in up and down
environments. The results below should only be considered as one
potential outcome, as the transaction is exposed to multiple
dynamic risk factors. It should not be used as an indicator of
possible future performance.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
A 25% default multiplier applied to the portfolio's mean default
rate, and with this subtracted from all rating default levels, and
a 25% increase of the recovery rate at all rating recovery levels,
would lead to an upgrade of up to five notches for the rated notes,
except for class A where the notes' ratings are at the highest
level on Fitch's scale and cannot be upgraded.
The transaction features a reinvestment period and the portfolio is
actively managed. At closing, Fitch uses a standardised stress
portfolio (Fitch's Stressed Portfolio) that is customised to the
specific portfolio limits for the transaction as specified in the
transaction documents. Even if the actual portfolio shows lower
defaults and losses (at all rating levels) than Fitch's Stressed
Portfolio assumed at closing, an upgrade of the notes during the
reinvestment period is unlikely, as the portfolio credit quality
may still deteriorate, not only through natural credit migration,
but also through reinvestments.
After the end of the reinvestment period, upgrades may occur in
case of a better than initially expected portfolio credit quality
and deal performance, leading to higher credit enhancement for the
notes and excess spread available to cover for losses on the
remaining portfolio.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Coronavirus Impact Analysis: Fitch has analysed the warehouse
portfolio, which includes EUR381 million of assets. Fitch has
identified the following sectors with the highest exposure to the
impact of the coronavirus pandemic: automobiles, transportation and
distribution; gaming, leisure and entertainment; retail, lodging
and restaurants; metal and mining; energy, oil and gas; and
aerospace and defence. Total portfolio exposure to these sectors is
EUR47.8 million (12.5%).
Fitch has run a scenario that envisages negative rating migration
by one notch for all assets in these sectors, plus any assets that
are on Negative Outlook (14.8% as of analysis date). All tranches
are still passing the assigned ratings under this stressed
scenario.
A 125% default multiplier applied to the portfolio's mean default
rate, and with the increase added to all rating default levels, and
a 25% decrease of the recovery rate at all rating recovery levels,
would lead to a downgrade of up to five notches for the rated
notes
Downgrades may occur if the buildup of credit enhancement for the
notes following amortisation does not compensate for a higher loss
expectation than initially assumed due to an unexpectedly high
level of default and portfolio deterioration. As the disruptions to
supply and demand due to COVID-19 become apparent for other
vulnerable sectors, loan ratings in those sectors would also come
under pressure. Fitch will update the sensitivity scenarios in line
with the view of Fitch Leveraged Finance team.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Most of the underlying assets have ratings or credit opinions from
Fitch and/or other Nationally Recognised Statistical Rating
Organisations and/or European Securities and Markets
Authority-registered rating agencies. Fitch has relied on the
practices of the relevant groups within Fitch and/or other rating
agencies to assess the asset portfolio information.
Overall, Fitch's assessment of the asset pool information relied on
for the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
CIFC EUROPEAN II: Moody's Gives B3 Rating to Class F Notes
----------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to Notes issued by CIFC European
Funding CLO II Designated Activity Company:
EUR 248,000,000 Class A Senior Secured Floating Rate Notes due
2033, Definitive Rating Assigned Aaa (sf)
EUR 30,000,000 Class B-1 Senior Secured Floating Rate Notes due
2033, Definitive Rating Assigned Aa2 (sf)
EUR 10,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2033,
Definitive Rating Assigned Aa2 (sf)
EUR 26,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2033, Definitive Rating Assigned A2 (sf)
EUR 28,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2033, Definitive Rating Assigned Baa3 (sf)
EUR 20,000,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2033, Definitive Rating Assigned Ba2 (sf)
EUR 12,000,000 Class F Senior Secured Deferrable Floating Rate
Notes due 2033, Definitive Rating Assigned B3 (sf)
RATINGS RATIONALE
The rationale for the ratings is based on a consideration of the
risks associated with the CLO's portfolio and structure as
described in its methodology.
The Issuer is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured obligations and up to 10%
of the portfolio may consist of senior unsecured obligations,
second-lien loans, mezzanine obligations and high yield bonds. The
portfolio is expected to be at least 95% ramped up as of the
closing date and comprises predominantly corporate loans to
obligors domiciled in Western Europe. The remainder of the
portfolio will be acquired during the six months ramp-up period in
compliance with the portfolio guidelines.
CIFC CLO Management II LLC will manage the CLO. It will direct the
selection, acquisition and disposition of collateral on behalf of
the Issuer and may engage in trading activity, including
discretionary trading, during the transaction's 4.5-year
reinvestment period. Thereafter, subject to certain restrictions,
purchases are permitted using principal proceeds from unscheduled
principal payments and proceeds from sales of credit impaired
obligations or credit improved obligations.
In addition to the seven classes of Notes rated by Moody's, the
Issuer will issue EUR 8,100,000 of Class Y Notes and EUR 37,700,000
of Subordinated Notes which will not be rated. The Class Y Notes
accrue interest in an amount equivalent to a certain proportion of
the subordinated management fees and its Notes' payment is pari
passu with the payment of the subordinated management fee.
The transaction incorporates interest and par coverage tests which,
if triggered, divert interest and principal proceeds to pay down
the Notes in order of seniority.
Its analysis has considered the increased uncertainty relating to
the effect of the coronavirus outbreak on the European economy as
well as the effects that the announced government measures put in
place to contain the virus, will have on the performance of
corporate assets. Moody's has performed additional analysis by
stressing the default probability and/or the default level of
portfolio assets belonging to industry sectors which have been
identified as having either high or moderate exposure to impacts of
the coronavirus outbreak. Such portfolio assets have already been
acquired by the issuer or are expected to be acquired prior to the
effective date. Moody's regards the coronavirus outbreak as a
social risk under its ESG framework, given the substantial
implications for public health and safety. It is a global health
shock, which makes it extremely difficult to provide an economic
assessment. The degree of uncertainty around its forecasts is
unusually high.
Methodology underlying the rating action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
March 2019.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated Notes' performance is subject to uncertainty. The Notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the Notes'
performance.
Moody's modeled the transaction using a cash flow model based on
the Binomial Expansion Technique, as described in Section 2.3 of
the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in March 2019.
Moody's used the following base-case modeling assumptions:
Par Amount: EUR 400,000,000
Diversity Score: 42
Weighted Average Rating Factor (WARF): 2,945
Weighted Average Spread (WAS): 3.62%
Weighted Average Coupon (WAC): 4.0%
Weighted Average Recovery Rate (WARR): 43.50%
Weighted Average Life (WAL): 8.5 years
Moody's has addressed the potential exposure to obligors domiciled
in countries with local currency ceiling (LCC) of A1 or below. As
per the portfolio constraints and eligibility criteria, exposures
to countries with LCC of A1 to A3 cannot exceed 10% and obligors
cannot be domiciled in countries with LCC below A3.
MADISON PARK XV: Fitch Gives B-sf Rating on Class F Debt
--------------------------------------------------------
Fitch Ratings has assigned Madison Park Euro Funding XV DAC final
ratings.
Madison Park Euro Funding XV DAC
- Class A-1; LT AAAsf; New Rating
- Class A-2; LT AAAsf; New Rating
- Class B; LT AAsf; New Rating
- Class C; LT Asf; New Rating
- Class D; LT BBB-sf; New Rating
- Class E; LT BB-sf; New Rating
- Class F; LT B-sf; New Rating
- Subordinated; LT NRsf; New Rating
TRANSACTION SUMMARY
Madison Park Euro Funding XV DAC is a securitisation of mainly
senior secured obligations (at least 95%) with a component of
senior unsecured, mezzanine, second-lien loans, first-lien last-out
loans and high-yield bonds. Note proceeds have been used to fund a
portfolio with a target par of EUR400 million. The portfolio will
be actively managed by Credit Suisse Asset Management Limited. The
collateralised loan obligation has a 4.5-year reinvestment period
and an 8.5-year weighted average life.
KEY RATING DRIVERS
'B' Portfolio Credit Quality: Fitch assesses the average credit
quality of obligors in the 'B' category. The Fitch weighted average
rating factor of the identified portfolio is 34.29, below the
indicative covenanted maximum Fitch WARF for final ratings of
34.5.
High Recovery Expectations: At least 95% of the portfolio will
comprise senior secured obligations. Fitch views the recovery
prospects for these assets as more favourable than for second-lien,
unsecured and mezzanine assets. The Fitch weighted average recovery
rate of the identified portfolio is 63.73%, above the indicative
covenanted minimum Fitch WARR of 61.3%.
Diversified Asset Portfolio: The transaction includes several Fitch
test matrices corresponding to several top 10 obligors'
concentration limits and fixed-rate limits. The manager can
interpolate within and between the matrices. The transaction also
includes various concentration limits, including the maximum
exposure to the three- largest (Fitch-defined) industries in the
portfolio at 40%. These covenants ensure that the asset portfolio
will not be exposed to excessive concentration.
Portfolio Management: The transaction has a 4.5-year reinvestment
period and includes reinvestment criteria similar to those of other
European transactions. Fitch's analysis is based on a stressed-case
portfolio with the aim of testing the robustness of the transaction
structure against its covenants and portfolio guidelines.
Cash Flow Analysis: Fitch used a customised proprietary cash flow
model to replicate the principal and interest waterfalls and the
various structural features of the transaction, and to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par value and interest coverage
tests. The class F notes present a marginal model failure of -2.06%
when analysing the stress portfolio on comparing the breakeven
default rate with the hurdle rate. Fitch has assigned a 'B-sf'
rating to the class F notes given that the breakeven default rate
is higher than the 'CCC' hurdle rate based on the stress portfolio
and higher than the 'B-' hurdle rate based on the identified
portfolio. As per Fitch's definition, a 'B' rating category
indicates that material risk is present, but with a limited margin
of safety, while a 'CCC' category indicates that default is a real
possibility. In Fitch's view, the class F notes can sustain a
robust level of defaults combined with low recoveries.
Furthermore, the transaction was also modelled using the current
portfolio and the current portfolio with a coronavirus sensitivity
analysis applied. Fitch's analysis was based on the stable
interest-rate scenario but include the front-, mid- and back-loaded
default timing scenarios as outlined in the agency's criteria.
Fitch gave credit to the manager's ability to build par in the
current environment in its analysis, by modelling an increased
aggregate collateral balance. The negative migration of the
portfolio modelled in the COVID-19 stress was offset by the par
built and all notes passed with a small cushion.
RATING SENSITIVITIES
This section provides insight into the model-implied sensitivities
the transaction faces when one assumption is modified, while
holding others equal. The modelling process uses the modification
of these variables to reflect asset performance in up and down
environments. The results below should only be considered as one
potential outcome, as the transaction is exposed to multiple
dynamic risk factors. It should not be used as an indicator of
possible future performance.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
A 25% default multiplier applied to the portfolio's mean default
rate, and with this subtracted from all rating default levels, and
a 25% increase of the recovery rate at all rating recovery levels,
would lead to an upgrade of up to four notches for the rated notes,
except for the class A, where the notes' ratings are at the highest
level on Fitch's scale and cannot be upgraded.
The transaction features a reinvestment period and the portfolio is
actively managed. At closing, Fitch uses a standardised stress
portfolio (Fitch's Stressed Portfolio) that is customised to the
specific portfolio limits for the transaction as specified in the
transaction documents. Even if the actual portfolio shows lower
defaults and losses (at all rating levels) than Fitch's Stressed
Portfolio assumed at closing, an upgrade of the notes during the
reinvestment period is unlikely, given the portfolio credit quality
may still deteriorate, not only by natural credit migration, but
also by reinvestments. After the end of the reinvestment period,
upgrades may occur in case of a better than initially expected
portfolio credit quality and deal performance, leading to higher
credit enhancement for the notes and excess spread available to
cover for losses on the remaining portfolio.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Coronavirus Sensitivity Analysis: Fitch has analysed the warehouse
portfolio, which includes EUR375.5 million of assets. Fitch has
identified the following sectors with the highest exposure to the
impact of the coronavirus pandemic: transportation and distribution
(airline and shipping related); gaming, leisure and entertainment;
retail, lodging and restaurants; metal and mining; energy oil and
gas; and aerospace and defence (airline related)
The total portfolio exposure to these sectors is EUR66.1 million.
As per guidance from Fitch's Leveraged Finance team, Fitch has run
a scenario that envisages negative rating migration by one notch
for all assets in these sectors. In addition, it has notched down
all assets whose Fitch-derived rating had a Negative Outlook. In
addition, the stress scenario includes a haircut to recovery
assumptions by applying a multiplier of 0.85 at all rating
scenarios to issuers in these sectors. The resulting default rate
is still below the breakeven default rate for the stress portfolio
analysis, meaning that rating migration of this magnitude would not
affect the CLO's ratings.
A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to three notches for the rated
notes. A 25% reduction in recovery rates would lead to a downgrade
of up to four notches for the rated notes.
Downgrades may occur if the build-up of credit enhancement for the
notes following amortisation does not compensate for a higher loss
expectation than initially assumed due to an unexpectedly high
level of default and portfolio deterioration. As the disruptions to
supply and demand due to the coronavirus crisis for other
vulnerable sectors become apparent, loan ratings in such sectors
would also come under pressure. Fitch will update the sensitivity
scenarios in line with the view of Fitch's Leveraged Finance team.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
The majority of the underlying assets have ratings or credit
opinions from Fitch and/or other nationally recognised statistical
rating organisations and/or European Securities and Markets
Authority-registered rating agencies. Fitch has relied on the
practices of the relevant groups within Fitch and/or other rating
agencies to assess the asset portfolio information.
Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
=========
I T A L Y
=========
LEONARDO SPA: S&P Alters Outlook to Stable & Affirms 'BB+/B' Rating
-------------------------------------------------------------------
S&P Global Ratings revised its outlook on Leonardo S.p.A. to stable
from positive and affirmed its 'BB+/B' ratings.
S&P said, "The effect of COVID-19 will likely hurt the group's
results in the short term and slow the momentum we projected
following a robust operating performance in fiscal 2019. To curb
the spread of COVID-19, particularly in Europe and the U.S.,
governments have locked down entire cities or countries. Although
designated an essential or key activity in many jurisdictions,
potential disruption means that Leonardo's deleveraging and ability
to generate free operating cash flow (FOCF) will take a hit in
2020. In 2019, the company achieved top-line revenue growth of
12.6% to EUR13.8 billion, and the EBITDA margin was 12.3% from
12.7% in 2018. Additionally, positive FOCF of more than EUR200
million sustained its leverage metrics. In 2020, Leonardo's FFO to
debt reached 32.3% improving from 30.2% in 2018. Although the
effects on Leonardo's top line, EBITDA, and ultimately cash
generation will depend on countries' lockdowns, reduced industrial
and sales activities, as well as potential supply-chain bottle
necks, we think it is highly unlikely that Leonardo's operating
performance would be better in 2020 than in 2019, although
management is proactively working on recovery plans.
"Good rating leeway for the 'BB+' rating sustains the stable
outlook. In our updated base case for 2020, we forecast FFO to
debt at about 25% assuming an uptick already in the second half of
the year. At this stage, we consider that the COVID-19 pandemic has
neutralized Leonardo's positive momentum and potential for a higher
rating. Nevertheless, we recognize that Leonardo's rating leeway is
ample enough to accommodate a relatively weaker financial
performance in 2020. The size of the decline will be more apparent
toward the end of the second quarter. For this reason, we affirmed
our ratings."
Financial performance depends on an increase in business activities
in second-half 2020, but its order backlog safeguards medium-term
business fundamentals. S&P said, "We recognize that Leonardo's
management is evaluating extraordinary measures to curb costs and
maintain its liquidity profile. However, due to its highly seasonal
working capital needs, we see a risk that the expected increase in
activity in second-half 2020 would be insufficient to maintain
materially positive FOCF. Therefore leverage metrics could spike in
2020. Furthermore, a significant growth driver is the first
deliveries of Eurofighter Typhoon aircraft to Kuwait, which would
play a critical role on Leonardo's 2020 operating performance.
Under our revised base case, we currently see revenues contracting
by 3%-5% in 2020 from EUR13.8 billion for 2019, EBITDA margins
reducing to 10.0%-10.5% from 12.3% for 2019, and FOCF being
moderately positive. However, the limited visibility generated by
the COVID-19 pandemic could result in a further downward revision
over the next few months. Another uncertainty related to the order
intake in 2020 and 2021. Additionally, amid our recession scenario
related to COVID-19 in 2020 we see uncertainty arising from
national budgets for defense and security. We note that the
company's guidance for 2020 excluding COVID-19 effects foresaw
revenues of EUR14.0 billion-EUR14.5 billion and FOCF of EUR400
million-EUR450 million. We see as positive that Leonardo had a firm
backlog at the end of 2019 of EUR36.5 billion almost unchanged
versus end-2018, which should sustain long-term business
prospects."
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P
said, "Some government authorities estimate the pandemic will peak
about midyear, and we are using this assumption in assessing the
economic and credit implications. We believe the measures adopted
to contain COVID-19 have pushed the global economy into recession.
As the situation evolves, we will update our assumptions and
estimates accordingly."
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
S&P said, "The stable outlook reflects our view that unprecedented
market conditions related to COVID-19 are likely to affect
Leonardo's operating performance in terms of postponement of some
planned deliveries, potential supply chain bottlenecks, and a
slower order intake for 2020. We therefore see FFO to debt at
around 25% as commensurate for the current rating. At the same
time, we acknowledge the rating headroom Leonardo built up over
2019.
"We would consider lowering the ratings if Leonardo's leverage
metrics were to deteriorate, more specifically if FFO to debt fell
below 20% for a sustained period with no prospects of near-term
recovery. We believe this scenario could materialize if COVID-19
were to alter the pattern of deliveries and order intake beyond
2020, absent management's actions to curtail operating leverage and
capex amid the adverse market conditions.
"We could consider upgrading Leonardo if the company's adjusted
FFO-to-debt ratio sustainably improved above 35% and its debt to
EBITDA declined toward 2x while maintaining an EBITDA margin of
about 13%. An upgrade would be possible if a solid top line and
EBITDA margins translate into FOCF generation of about EUR300
million per year, and management maintains its commitment to credit
metrics commensurate with an investment-grade rating."
REKEEP SPA: S&P Alters Outlook to Negative & Affirms 'B' ICR
------------------------------------------------------------
S&P Global Ratings affirmed at 'B' its long-term issuer credit
rating on Rekeep SpA, an Italy-based facility management company,
and its issue credit rating on its EUR360 million senior secured
notes.
Rekeep performed in line with S&P's expectations in 2019 and
continues to focus on growth in its core business and across new
markets. The company performed in line with its 2019 financial
expectations. It demonstrated strong performance in the laundry and
sanitization business and won new contracts, supported by its
strong backlog. Rekeep also acquired 80% of Naprzod S.A., a leader
in Poland's health care facility management sector. It now operates
in France, Turkey, and Poland, as well as its home market of Italy.
International revenue now represents 11% of total revenue.
Rekeep continues to perform essential services during the COVID-19
pandemic. Rekeep still provides services to many essential sectors,
such as health care, transportation, distribution, and
supermarkets. Many of its staff continue to work to service these
sectors during the current pandemic. S&P said, "Although revenue is
likely to be affected by the lockdown and social distancing
measures taken to curb the spread of COVID-19, we anticipate that
this will be somewhat mitigated by increased demand in the health
care sector and continued new business wins. Our negative outlook
indicates that our credit metrics are tightening and FOCF will
temporarily turn negative because of the operational impact of
COVID-19."
Rekeep has sufficient cash on balance sheet to support operations
over the coming months. Following the sale of Sicura, management
had cash on balance sheet at year-end 2019 of about EUR150 million.
S&P considers this sufficient to weather the marginal reduction in
operational activity caused by the COVID-19 pandemic over the
coming months while also making any upcoming litigation payments.
Rekeep is more exposed to governance factors than its business
services peers. It faces several ongoing legal investigations
relating to corruption in contract tendering and internal control
deficiencies. In particular, the Italian Anti-Corruption Authority
excluded Rekeep from all public tenders for six months following an
investigation into corruption involving its Santobono hospital
contract, which was suspended in January 2019. In addition, the
company was fined EUR91.6 million by the Italian Competition
Authority (ICA), which it intends to contest. Rekeep has commenced
payments on this via growing installments over 72 months.
Public tenders in Italy currently generate EUR400 million a year in
revenue for the company, although not all that revenue would be
lost, because the public contracts last for several years. In S&P's
view, these proceedings highlight possible deficiencies in Rekeep's
internal controls and compliance management. Management stated that
it has taken steps to improve its internal controls framework,
which supports its fair management and governance assessment.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
Governance
S&P said, "The negative outlook indicates that we expect Rekeep's
operations to be disrupted in the current trading conditions,
resulting in negative FOCF over the next 12 months. We expect these
conditions to be temporary, unless the impact of COVID-19 is
prolonged.
"We could lower the rating if the ongoing litigation results in
higher-than-expected financial penalties or a material contraction
in revenue.
"In particular, we could lower the rating if credit metrics
deteriorated for a sustained period, resulting in funds from
operations (FFO) cash interest coverage below 2.0x, or FOCF
remaining negative or at minimal levels for a prolonged period.
In addition, large unanticipated cash needs or a significant
worsening of credit terms could put Rekeep's liquidity under stress
and cause us to downgrade the company.
"We could revise the outlook to stable if the company saw improved
revenue and cash flow generation from a quicker containment of the
pandemic than expected, or it saw a reduction in pending litigation
costs. We would expect to see positive FOCF, FFO to debt interest
coverage comfortably above 2x, and maintenance of adequate
liquidity."
===================
K A Z A K H S T A N
===================
KAZAKH AGRARIAN: S&P Withdraws 'BB/B' Issuer Credit Ratings
-----------------------------------------------------------
S&P Global Ratings withdrew its 'BB/B' issuer credit ratings on
Kazakh Agrarian Credit Corp. The outlook was stable at the time of
withdrawal.
S&P's also withdrawn its 'kzA+' Kazakhstan national scale ratings
and its issue ratings on all the company's debt.
At the time of withdrawal, the ratings reflected S&P's view that
KACC remained a highly strategically important subsidiary of
KazAgro Group, which essentially implements and oversees key
government programs in the agricultural sector in Kazakhstan.
KACC's role within the group is to provide financing to the
agricultural sector. KACC's stand-alone credit profile stood at
'b-', reflecting high economic and industry risks in Kazakhstan,
and the risks associated with the company's narrow business model
and relatively large amount of problem assets on the balance
sheet.
===================
L U X E M B O U R G
===================
ASTON FINCO: Bank Debt Trades at 16% Discount
---------------------------------------------
Participations in a syndicated loan under which Aston Finco Sarl is
a borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The GBP285 million term loan is scheduled to mature on October 9,
2026. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Luxembourg.
AURIS LUXEMBOURG: Bank Debt Trades at 29% Discount
--------------------------------------------------
Participations in a syndicated loan under which Auris Luxembourg
III Sarl is a borrower were trading in the secondary market around
71 cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR500 million term loan is scheduled to mature on February 21,
2027. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Luxembourg.
CCP LUX: S&P Affirms 'B' Issuer Credit Rating, Outlook Stable
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term issuer credit rating
on cosmetic packaging producer CCP Lux Holding S.a.r.l. (Axilone),
as well as its 'B' issue rating on the senior secured term loan B.
The COVID-19 pandemic will lead to a contraction in revenues in
2020. Axilone's packaging products mostly relate to the cosmetic
sector, which relies on retail sales and discretionary spending.
The social-distancing measures implemented by governments (in light
of COVID-19) have led to the temporary closure of retail outlets, a
rise in unemployment rates, and higher economic uncertainty. This
has resulted in a material decline in demand for cosmetic products
worldwide. Axilone reduced its production from March 2020 onward.
S&P believes that the group's revenues could decline by 30% in
2020, if social-distancing measures are gradually lifted after the
peak of the pandemic (currently forecast by some government
authorities for mid-2020).
Axilone's credit metrics will weaken during 2020, but bounce back
in 2021. S&P said, "We expect a decline in EBITDA margins in 2020
due to higher operational inefficiencies (as plants are subject to
intermit production stoppages) and lower fixed cost absorption. We
believe that EBITDA margins could drop to 27% (from 32% in 2019) if
production continues to be affected, and run partially in May and
June. Under those conditions, S&P Global Ratings-adjusted leverage
would reach 8.0x by year-end 2020 (up from 4.8x in 2019).
Similarly, we believe that funds from operations (FFO) to debt
could decline to 6.4% (from 11.8% in 2019). So far, we assume that
the lockdown measures will primarily affect the second quarter of
2020. We expect demand and operations to return to normal from 2021
onward, with revenue growth of about 8% and EBITDA margins of about
30.5% during that year."
Axilone has an adequate liquidity position supported by sufficient
liquidity sources and a lack of significant short-term debt
maturities. The former includes cash on balance sheet (EUR43
million as of early April 2020), EUR31.5 million available under
the EUR50 million revolving credit facility (RCF), and modest FFO
generation. S&P believes that Axilone has significant covenant
headroom to fully utilize its RCF if needed. S&P also notes that
the company lowered its capital investment forecast for 2020, in
light of the COVID-19 outbreak.
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P said,
"Some government authorities estimate the pandemic will peak about
midyear, and we are using this assumption in assessing the economic
and credit implications. We believe the measures adopted to contain
COVID-19 have pushed the global economy into recession. As the
situation evolves, we will update our assumptions and estimates
accordingly."
S&P said, "The stable outlook reflects our expectation that
Axilone's credit metrics will temporarily deteriorate in 2020 due
to the COVID-19 pandemic. In 2020, we expect leverage to increase
to about 8.0x and FOCF generation to be nil. We expect a
significant improvement in credit metrics from 2021 onwards as
manufacturing output reverts to normal levels and global demand for
cosmetic products recovers."
S&P would consider lowering its rating on Axilone if:
-- The economic impact of the COVID-19 pandemic was more
protracted than we currently expect;
-- FOCF is negative on a sustained basis or there is a material
deterioration in liquidity; or
-- The debt to EBITDA ratio exceeds 7.0x on sustained basis.
S&P view san upgrade in the near term as unlikely. However, it
could raise the rating if:
-- Axilone retained robust credit measures, with leverage
approaching 5.0x and FFO to debt of at least 12%, while maintaining
positive FOCF; and
-- The company and its owners commit to maintaining a conservative
financial policy that would support such improved ratios.
CORESTATE CAPITAL: S&P Alters Outlook to Stable & Affirms BB+ ICR
-----------------------------------------------------------------
S&P Global Ratings said that it revised its outlook to stable from
positive on Luxembourg-based real estate asset manager CORESTATE
Capital Holding S.A. (Corestate). The 'BB+' long-term issuer credit
rating was affirmed.
The outlook revision follows a review of Corestate's business
developments and forecasts, in light of the COVID-19 pandemic. S&P
said, "Corestate's profitability is now unlikely to be as buoyant
as we previously assumed, due to the COVID-19-related general
slowdown of economic activities. We made a material revision to our
revenues forecast, since we expect that the company will not be
able to escape the negative sentiment on the markets and a material
decrease in transactions and overall business flow. We now expect a
low single-digit decrease in revenues for 2020, which incorporates
two offsetting effects: the positive impact of integrating French
asset manager STAM Europe, and the negative impact from the
decrease of transactions."
S&P said, "We originally expected Corestate's deleveraging policy
to result in net debt to adjusted EBITDA in 2019 of around 3.0x
before reducing further from 2020, thanks to EBITDA improvements
and strong cash flow generation, and dropping to 2.4x by end-2021.
Contrary to our expectations, net debt to adjusted EBITDA was
materially higher in 2019, at about 3.5x according to our
calculation. This gap compared with our previous forecast reflects
a delay in cash inflow from the sale of the warehousing portfolio,
which represented a material setback compared with our
expectations.
"We now expect debt to adjusted EBITDA will decrease to below 3x
only during 2021. We no longer expect leverage to improve closer to
2.0x in 2020, which was the trigger for an upgrade. Although we
still believe Corestate's financial policies are credible and
clear, we continue to regard its financial risk profile as no
better than intermediate.
"We affirmed the rating also because of Corestate's successful
track record of integrating acquisitions, including that of STAM
Europe in January 2020, and the continued upgrade of its governance
and operating infrastructure. We consider that, following its
transformation over recent years, Corestate now stands out as one
of the leading players in the fragmented real estate asset manager
market in Europe. We don't expect a structural shift in investor
preferences in these markets, which form the base of Corestate's
business model.
"Corestate concentrates on the residential niche, which will likely
remain a relatively low-risk area due to persistent structural
shortages. We don't expect a material correction of the residential
real estate markets in Germany or other countries where Corestate
operates. We expect that Corestate will benefit from strong
undersupply in the residential market and low interest rate
environment, which should fuel construction activity in the medium
term at least. This is in particular relevant for Germany,
Corestate's main market, which represents over 75% of invested
assets under management.
"We assess Corestate's liquidity as adequate because we expect that
liquidity sources will cover uses by at least 1.6x over the 12
months from Dec. 31, 2019. This places the company in a comfortable
position should access debt markets become more difficult or
costly.
"The stable outlook reflects our expectation that, over the next
12-18 months, Corestate will remain committed to its deleveraging
targets, but weaker than expected profitability will not support an
improvement of leverage ratios as initially expected. Net debt to
adjusted EBITDA will likely remain high for the rating level,
stagnating at around 3.5x throughout 2020 and decreasing below 3x
only in 2021. We still think the company may report short-term
spikes in leverage, depending on the warehousing level and
acquisitions, but, we believe its deleveraging strategy is
credible.
"We may consider a negative rating action if, despite management's
strategy, leverage does not decrease to 3x or lower by the end
2021. This could happen if we see a bigger than expected impact on
revenues, notably from transactions, due to the COVID-19-related
economic downturn or management's inability to reduce costs to
mitigate the negative effect on the bottom line. Any relaxation of
management's strong commitment or lack of a feasible plan to
sustainably reduce leverage would also lead to the downgrade, since
a leverage ratio exceeding 3x typically points to a weaker
financial risk profile."
A positive rating action is very remote as long as leverage remains
above 3x.
CURIUM BIDCO: Bank Debt Trades at 25% Discount
----------------------------------------------
Participations in a syndicated loan under which Curium Bidco Sarl
is a borrower were trading in the secondary market around 75
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR300 million term loan is scheduled to mature on July 11,
2026. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Luxembourg.
KIWI VFS: Moody's Cuts CFR to B2 & Alters Outlook to Negative
-------------------------------------------------------------
Moody's Investors Service has downgraded Kiwi VFS SUB I S.a r.l.'s
corporate family rating to B2 from B1 and the probability of
default rating to B2-PD from B1-PD. Concurrently, Moody's has also
downgraded all the instrument ratings to B2 from B1, including: the
USD39 million senior secured revolving credit facility due 2023,
the USD51 million senior secured guarantee facility due 2023, the
GBP341 million senior secured term loan B1 due 2024, and the EUR363
million senior secured term loan B2 due 2024. All the facilities
are borrowed by Kiwi VFS SUB II S.a r.l. and guaranteed by Kiwi VFS
SUB I S.a r.l. The outlook has been changed to negative from
stable.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The travel sector
has been one of the sectors most significantly affected by the
shock given the global restrictions on movement. More specifically,
the VFS's dependence on international air travel has left it
vulnerable to extreme revenue losses in these unprecedented
operating conditions and the company remains vulnerable to the
outbreak for as long as the current restrictions continue. Its
action reflects the impact on VFS of the breadth and severity of
the shock, and the broad deterioration in credit quality it has
triggered.
The downgrade and revision of the outlook to negative was prompted
by Moody's expectation that the company will face significant
pressure on all its key credit metrics - including a material cash
shortfall if no action is taken - over the next 12-18 months until
air travel potentially recovers substantially in H2 2021. To bridge
this cash shortfall, the company's shareholders, led by sponsor
EQT, have committed to providing a CHF140 million loan facility to
rank pari passu with existing debt, and the company has also
received commitments to increase its RCF by CHF20 million. In
addition, the company has undertaken very aggressive cost and capex
reduction actions that are expected to preserve cashflow in excess
of CHF 75m during 2020.
The B2 CFR is also constrained by (1) the company's high customer
concentration; (2) the short-term volatility in the demand for visa
applications due to macro-economic conditions but also to
medium-term threats such as visa digitisation trends (although the
company has to date benefitted from its market-leading e-visa
solution and a physical process is required for biometric enrolment
which is a key security requirement for most of its client
governments); (3) its exposure to foreign-exchange movements owing
to the mismatch between the reporting currency (e.g. CHF) and the
main operating currencies (e.g. GBP, USD and Euro) although
adequately managed at a transactional level, and; (4) the risks of
dividend payment, recapitalization and/or material debt funded
acquisition.
VFS' rating is supported by (1) the company's leading position with
a 54% share in the growing visa application services outsourcing
market; (2) the company's broad and diversified geographic presence
in 147 countries which provides for a degree of competitive
advantage because government and missions are seeking global
contracts; (3) previously favourable industry fundamentals for
(airline passenger) outbound travel during normal operating
conditions as well as visa outsourcing trends supporting volume
growth; (4) positive free cash flow generation driven partly by
structurally negative working capital, although this is currently a
disadvantage because as revenue decreases the effect is reversed;
and (5) the exclusivity of its service for the client governments
so that travelers will have to use VFS' services.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on the ratings is not expected in the near term but
could materialise over time if VFS recovers from the impact on its
business of the coronavirus pandemic and reduces its (Moody's
adjusted) debt/EBITDA sustainably below 5x. No expectation of a
potential re-leveraging through a dividend recapitalization or
material debt funded acquisition would also likely be a requirement
of any upgrade.
Conversely, downward ratings pressure would occur if (1) the CHF140
million new loan facility, CHF20 million new RCF, or covenant reset
currently under negotiation do not complete as planned; (2) the
company is not able to delay the deferred payment of c. CHF68
million due in September 2020 to well into 2021; (3) leverage
stabilizes at a sustainable level above 6x; (4) the company loses a
material customer, or (5) the company adopts a more aggressive
financial policy.
LIQUIDITY
Moody's considers VFS's liquidity position to be adequate for its
near-term needs, assuming the contemplated new facilities (CHF140
million additional term loan and CHF20 RCF) are completed as
planned and the payment of around CHF68 million can be delayed. The
company also has cash on balance sheet at March 2020 of around
CHF107 million including the fully drawn USD39 million existing RCF
and there is no debt amortisation until 2024. The RCF has one
springing financial covenant (total net leverage ratio), which is
being changed to a minimum liquidity covenant set with comfortable
headroom.
STRUCTURAL CONSIDERATIONS
Using Moody's Loss Given Default for Speculative-Grade Companies
methodology, the B2-PD Probability of Default Rating is in line
with the CFR. This is based on a 50% recovery rate, as is typical
for transactions including only 1st lien bank debt with no
financial maintenance covenants. The term loans, the RCF, and
guarantee facility all rank pari passu and are rated in line with
the CFR. All debt facilities are secured by pledges over shares,
bank accounts and receivables, and guaranteed by material
subsidiaries representing at least 80% of the consolidated EBITDA
and gross assets.
RATIONALE FOR THE NEGATIVE OUTLOOK
The negative outlook reflects the Moody's view that VFS will
continue to will experience continued underperformance from the
coronavirus outbreak, but that the company will be able to
partially offset these adversities and support liquidity shortfalls
through sponsor support. The outlook could be stabilized if there
is enough clarity regarding the coronavirus situation to reliably
establish that the company's credit metrics are expected to stay
well within the established key indicators commensurate for the B2
rating.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Moody's regards the coronavirus outbreak as a social risk under
Moody's ESG framework, given the substantial implications for
public health and safety.
The governance risks Moody's considers in the company's credit
profile include a moderately aggressive financial policy
characterized by debt-financed acquisitions and private-equity
ownership. Moody's notes that the planned CHF140 million cash
injection by EQT is a credit positive, albeit it is in the form of
pari passu ranking debt rather than equity or subordinated debt.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
PROFILE
Established in 2001, VFS Global is the world's largest outsourcing
specialist for governments and diplomatic missions worldwide. The
company is primarily engaged in the processing of visa and passport
applications, and as of December 2018, operates in 147 countries
through 2,997 application centres, serving 62 client governments.
VSF employs over 9,500 people and handled approximately 25.3
million of applications in 2018.
In 2019 the company generated CHF750 million of revenue and
reported CHF218 million of EBITDA. VFS has been legally separated
from the Kuoni Group since May 19, 2017 and the management team is
based in Dubai. Private equity firm EQT is the main shareholder of
VFS.
PI LUX: Bank Debt Trades at 27% Discount
----------------------------------------
Participations in a syndicated loan under which Pi Lux Finco Sarl
is a borrower were trading in the secondary market around 73
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD200 million term loan is scheduled to mature on January 1,
2026. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Luxembourg.
SWISSPORT FINANCING: Bank Debt Trades at 31% Discount
------------------------------------------------------
Participations in a syndicated loan under which Swissport Financing
Sarl is a borrower were trading in the secondary market around 69
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR50 million facility is a term loan. It is scheduled to
mature on August 14, 2024.
The Company's country of domicile is Luxembourg.
=====================
N E T H E R L A N D S
=====================
BRIGHT BIDCO: Bank Debt Trades at 69% Discount
----------------------------------------------
Participations in a syndicated loan under which Bright Bidco BV is
a borrower were trading in the secondary market around 31
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD1683 million term loan is scheduled to mature on June 30,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Netherlands.
CREDIT EUROPE: Moody's Cuts LT Deposit Rating to Ba3, Outlook Neg.
------------------------------------------------------------------
Moody's Investors Service downgraded Credit Europe Bank N.V.'s
long-term deposit rating to Ba3 from Ba2. The rating agency also
downgraded the bank's Baseline Credit Assessment and Adjusted BCA
to b2 from b1, its long-term Counterparty Risk Rating to Ba2 from
Ba1 and its long-term Counterparty Risk Assessment to Ba2(cr) from
Ba1(cr). Furthermore, Moody's affirmed the subordinated debt rating
of B2, the short-term deposit rating and CRR of Not-Prime and the
short-term CR Assessment of Not Prime(cr).
The outlook on the long-term deposit ratings remains negative.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its rating action reflects the deteriorating operating environment
from the coronavirus outbreak in Europe and the associated downside
risks to CEB NV's standalone credit profile.
RATINGS RATIONALE
As a small bank focused on lending to corporates and with
non-negligible exposures to countries (notably Turkey, Russia and
other emerging economies) that will not provide the same level of
economic support to the corporate sector as the major Western
European countries in Moody's view, CEB NV's credit exposures will
likely be materially affected by the current crisis.
Moreover, the bank's loan portfolio encompasses significant
exposures to economic sectors that will likely be the most severely
hit by the expected economic contraction. At year-end 2019, the
banks' exposure to the leisure and tourism and commercial real
estate sectors accounted for 10.6% and 11.1% of its loan book
respectively. A large share of these exposures consists of loans to
hotels and shopping malls, the activity of which is stalled. Single
name exposures within these portfolios are also material. The
bank's exposure to the oil and gas sectors accounting for 15.1% of
its loan book at year-end 2019 also represents a pocket of
vulnerability, although the risks involved are somewhat mitigated
by their limited sensitivity to oil price variations and their
short-term nature.
CEB NV's recurring profit is weak relative to the bank's risk
profile and provides limited ability to absorb a material increase
in the cost of risk. The aforementioned credit concentrations on
high-risk sectors could weigh on the bank's capital position.
Despite a high CET1 ratio of 15.7% at year-end 2019, capital could
be eroded in the event of a prolonged halt in economic activities,
implying an enduring impact on the bank's creditworthiness.
Although CEB NV's has regularly benefitted from capital support
from its parents FIBA Holding A.S. and FINA Holding A.S (both
unrated) in the past, the magnitude of the risks to the bank's
portfolio is better reflected by a lower BCA of b2.
CEB NV's long-term deposit and subordinated debt ratings reflect
the bank's BCA and Adjusted BCA of b2 and the application of
Moody's Advanced Loss Given Failure analysis to its liabilities.
The downgrade on the deposit rating to Ba3 results from the
downgrade of the BCA. The B2 subordinated debt rating was affirmed
because the downgrade of the BCA was offset by a decrease in the
loss-given-failure for this class of debt.
The outlook remains negative to reflect the risk of further
deterioration in the bank's solvency beyond what Moody's currently
anticipates. In addition, CEB NV's deposit rating is also sensitive
to a higher loss-given-failure stemming from a decrease in
subordinated instruments.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of CEB NV's BCA and ratings is unlikely over the outlook
horizon, as reflected in the negative outlook.
CEB NV's BCA and long-term ratings could be downgraded if a deeper
and more prolonged recession were to result in a further increase
in asset risk and capital depletion. Finally, CEB NV's long-term
deposit ratings could be downgraded were the cushion of
subordinated instruments to shrink.
LIST OF AFFECTED RATINGS
Downgrades:
Issuer: Credit Europe Bank N.V.
Adjusted Baseline Credit Assessment, Downgraded to b2 from b1
Baseline Credit Assessment, Downgraded to b2 from b1
LT Counterparty Risk Assessment, Downgraded to Ba2(cr) from
Ba1(cr)
LT Counterparty Risk Ratings, Downgraded to Ba2 from Ba1
LT Bank Deposit Ratings, Downgraded to Ba3 from Ba2, Outlook
Remains Negative
Affirmations:
Issuer: Credit Europe Bank N.V.
ST Counterparty Risk Assessment, Affirmed NP(cr)
ST Counterparty Risk Ratings, Affirmed NP
ST Bank Deposit Ratings, Affirmed NP
Subordinate Regular Bond/Debenture, Affirmed B2
Outlook Actions:
Issuer: Credit Europe Bank N.V.
Outlook, Remains Negative
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
DEMIR-HALK BANK: Moody's Affirms Ba1 Deposit Rating, Outlook Neg.
-----------------------------------------------------------------
Moody's Investors Service affirmed the Ba1 long-term deposit rating
of Demir-Halk Bank (Nederland) N.V., as well as its ba1 BCA and
Adjusted BCA, its Baa3 long-term Counterparty Risk Ratings and
Prime-3 short-term CRR, and its Baa2(cr)/Prime-2(cr) Counterparty
Risk (CR) Assessment. The rating agency also affirmed DHB's Not
Prime short-term deposit rating.
The outlook on the long-term deposit ratings remains negative.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its rating action reflects the deteriorating operating environment
from the coronavirus outbreak in Europe and the associated downside
risks to DHB's standalone credit profile.
RATINGS RATIONALE
The affirmation of the ba1 BCA is driven by DHB's strong
capitalization and solid funding and liquidity profile, offset by
the bank's limited product diversification with limited (but
growing) retail exposures and high credit concentration in the
corporate loan book. The deteriorating operating environment from
the coronavirus outbreak in Europe and the associated downside
risks to DHB's standalone credit profile remain commensurate with a
BCA of ba1.
DHB's recurring profit, although stable over the years, provides
limited ability to absorb a material increase in the cost of risk,
a vulnerability exacerbated by high single name credit
concentrations. However the bank's capital is strong, with a CET1
ratio of 19.7% at year-end 2019, yet could be eroded in the event
of a prolonged halt in economic activities, implying a more
enduring impact on the bank's creditworthiness.
DHB's long-term deposit rating reflects the bank's BCA and Adjusted
BCA of ba1 and the application of Moody's Advanced Loss Given
Failure analysis to its liabilities, which indicates a moderate
loss-given-failure for deposit ratings, resulting in no uplift from
the bank's Adjusted BCA.
OUTLOOK
The outlook on DHB remains negative, reflecting the risk that
negative developments in Turkey could spill over onto DHB's
customers and alter their creditworthiness. The negative outlook
now also incorporates the risk of increasing financial stress due
to the coronavirus outbreak, beyond what Moody's anticipates
currently.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of DHB's BCA and ratings is unlikely over the outlook
horizon as reflected by the negative outlook.
A downgrade of DHB's BCA and long-term ratings could be triggered
by:
- A deeper and more prolonged recession resulting in further
increase in asset risk and capital depletion.
- A further deterioration in the operating environment in Turkey,
resulting in a weakening creditworthiness of the bank's exposures
to its Turkish counterparties (banks and companies).
A downgrade could also be triggered by lower capitalisation or
reduced profitability.
LIST OF AFFECTED RATINGS
Affirmations:
Issuer: Demir-Halk Bank (Nederland) N.V.
Adjusted Baseline Credit Assessment, Affirmed ba1
Baseline Credit Assessment, Affirmed ba1
ST Counterparty Risk Assessment, Affirmed P-2(cr)
LT Counterparty Risk Assessment, Affirmed Baa2(cr)
ST Counterparty Risk Ratings, Affirmed P-3
LT Counterparty Risk Ratings, Affirmed Baa3
ST Bank Deposit Ratings, Affirmed NP
LT Bank Deposit Ratings, Affirmed Ba1, Outlook Remains Negative
Outlook Actions:
Issuer: Demir-Halk Bank (Nederland) N.V.
Outlook, Remains Negative
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
GARANTIBANK INT'L: Moody's Affirms Ba1 Deposit Rating, Outlook Neg.
-------------------------------------------------------------------
Moody's Investors Service affirmed the long-term and short-term
deposit ratings of GarantiBank International N.V. at Ba1/Not Prime,
as well as the bank's ba2 standalone Baseline Credit Assessment and
its ba1 Adjusted BCA. The rating agency also affirmed GBI's
long-term and short-term Counterparty Risk Ratings at Baa3/Prime-3,
and the bank's long-term and short-term Counterparty Risk (CR)
Assessment at Baa2(cr)/ Prime-2(cr).
The outlook on the long-term deposit ratings remains negative.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its rating action reflects the deteriorating operating environment
from the coronavirus outbreak in Europe and the associated downside
risks to GBI's standalone credit profile.
RATINGS RATIONALE
The affirmation of the ba2 BCA is driven by GBI's (i) strong
capitalization, (ii) sound profitability, and (iii) solid liquidity
and deposit base, which are offset by the risks from exposures to
Turkish counterparties. The deteriorating operating environment
from the coronavirus outbreak in Europe and the associated downside
risks to GBI's standalone credit profile remain commensurate with a
BCA of ba2. Although loans to Turkish customers have declined to
30% of the bank's gross loans at year-end 2019, from 35% in 2018,
and the loan exposure to its direct parent Garanti BBVA is limited,
GBI's total exposures to Turkish customers (loans, banks and
securities) still represent a material part of its total assets at
EUR973 million, or 170% of its CET1 capital. Despite the short-term
nature of most of its trade finance assets, GBI's risk profile
remains sensitive to a further worsening of the funding conditions
of its Turkish customers, which could trigger an increase in its
non-performing loans and a volatile cost of risk. Given the
commercial links and the common brand with Garanti BBVA,
difficulties at the parent in Turkey could potentially spill over
to GBI, leading Moody's to cap GBI's BCA four notches above Garanti
BBVA's own BCA of b3.
GBI has exposures, at around 20% of its loan book, to economic
sectors that will likely be the most severely hit by the expected
economic contraction, such as transport, construction and
commercial real estate, and single-name concentrations are still
elevated, albeit declining. Despite a high CET1 ratio of 23.9% at
year-end 2019, capital could be eroded in the event of a prolonged
halt in economic activities, implying an enduring impact on the
bank's creditworthiness.
GBI's adjusted BCA of ba1 is positioned one notch above the bank's
BCA of ba2, benefiting from Moody's assumption of a moderate
probability of affiliate support from its ultimate parent Banco
Bilbao Vizcaya Argentaria, S.A. (BBVA, A2 stable, baa2).
GBI's long-term deposit rating reflects the bank's Adjusted BCA of
ba1 and the application of Moody's Advanced Loss Given Failure
(LGF) analysis to its liabilities, which indicates a moderate
loss-given-failure for deposit ratings, resulting in no uplift from
the bank's Adjusted BCA.
OUTLOOK
The outlook on GBI's long-term deposit ratings is already negative,
in line with its direct parent, Turkiye Garanti Bankasi (Garanti
BBVA, B2 negative, b3). This reflects the risk of a further
deterioration in the macroeconomic environment in Turkey where the
bank's parent is located and where it has material exposures.
Further negative developments in Turkey could spill over on to
GBI's customers and alter their creditworthiness. The negative
outlook now also incorporates the risk of increasing financial
stress due to the coronavirus outbreak, beyond what Moody's
anticipates currently.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of GBI's BCA and ratings is unlikely, as evidenced by
the negative outlook currently assigned to its ratings.
A downgrade of the bank's BCA could result from:
- A deeper and more prolonged recession resulting in further
increase in asset risk and capital depletion.
- Increased asset risk and weakening solvency, mainly stemming
from a deterioration of the creditworthiness of the bank's Turkish
counterparties
- A downgrade of Garanti BBVA's BCA, resulting from heightened
asset risk or a deteriorating funding profile
- Increased linkages between GBI and Garanti BBVA, which Moody's
could consider to be no longer compatible with a four-notch
difference between GBI's BCA and that of its parent Garanti BBVA
A downgrade of GBI's Adjusted BCA could also result from a reduced
likelihood of support from BBVA.
A downgrade of GBI's BCA and Adjusted BCA would likely result in a
downgrade of all the bank's long-term ratings and assessments.
Finally, GBI's long-term deposit rating could also be downgraded as
a result of a lower volume of junior deposits, resulting in high
loss-given-failure.
LIST OF AFFECTED RATINGS
Affirmations:
Issuer: GarantiBank International N.V.
Adjusted Baseline Credit Assessment, Affirmed ba1
Baseline Credit Assessment, Affirmed ba2
ST Counterparty Risk Assessment, Affirmed P-2(cr)
LT Counterparty Risk Assessment, Affirmed Baa2(cr)
ST Counterparty Risk Ratings, Affirmed P-3
LT Counterparty Risk Ratings, Affirmed Baa3
ST Bank Deposit Ratings, Affirmed NP
LT Bank Deposit Ratings, Affirmed Ba1, Outlook Remains Negative
Outlook Actions:
Issuer: GarantiBank International N.V.
Outlook, Remains Negative
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
KETER GROUP: Bank Debt Trades at 25% Discount
----------------------------------------------
Participations in a syndicated loan under which Keter Group BV is a
borrower were trading in the secondary market around 75
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR95 million facility is a term loan. It is scheduled to
mature on October 31, 2023.
The Company's country of domicile is Netherlands.
Q-PARK HOLDING: Moody's Cuts CFR to Ba3 & Alters Outlook to Neg.
----------------------------------------------------------------
Moody's Investors Service downgraded Q-Park Holding B.V.'s
corporate family rating and probability of default rating to Ba3
and Ba3-PD from Ba2 and Ba2-PD respectively. At the same time
Moody's downgraded the rating on the senior secured notes due in
2025, 2026 and 2027 issued by Q-Park's direct subsidiary Q-Park
Holding I B.V. to Ba3 from Ba2. The outlook is negative on all
ratings.
RATINGS RATIONALE
The downgrade of Q-Park's ratings to Ba3 reflects Moody's
expectation that the increase in leverage that will result from the
material loss of revenue and deterioration in operating performance
in 2020 will lead to credit metrics no longer commensurate with its
guidance for the Ba2 rating over the foreseeable future. The
negative outlook takes account of the large uncertainty around the
timing and scope of a traffic recovery which raises Q-Park's credit
and liquidity risks.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented.
The car park operating industry has been one of the sectors most
significantly affected by the shock notably because of its exposure
to mobility restrictions and consumer demand. Moody's current base
case assumption is that the coronavirus pandemic will lead to a
period of severe cuts in traffic over the upcoming weeks,
reflecting the significant restrictions on travel, but that there
will be a recovery in traffic volumes in the second half of 2020.
However, unlike previous negative shocks, the prospects for traffic
rebound is more uncertain because (1) governments may choose to
keep some form of restrictions or travel bans even if the spread of
the virus seems contained; and (2) the deteriorating economic
conditions could slow down the recovery in traffic and consumer
spending, even if travel restrictions are eased. As events continue
to unfold rapidly, there is a higher than usual degree of
uncertainty around the duration of travel restrictions and drop in
consumer demand. Hence, it is difficult to predict the overall
traffic volumes for 2020.
Against that backdrop Moody's currently assumes a significant
decline in Q-Park's revenue in the financial year ending December
2020, driven by dramatic declines in the first half of the year and
a recovery in the second half albeit phased over the period. In an
attempt to mitigate the impact of the drop in revenue, Q-Park has
taken several measures to reduce operating and capital
expenditures, including trying to negotiate a cut in fixed lease
charges with owners of parking facilities, participating in
government-backed mechanisms to temporarily cover salary and other
costs, and limiting investment to the critical aspects of the
existing business. However, those measures would not be sufficient
to offset the revenue loss in the scenario of more prolonged
mobility restrictions.
Notwithstanding the significantly reduced cash flow over at least
the next few weeks, Q-Park remains a relevant infrastructure
provider with potential for recovery once the coronavirus outbreak
and its effects have been contained.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety that lead to severe restrictions to road traffic.
Q-Park's Ba3 CFR reflects: (1) a strong asset-ownership model with
operations based on legally owned assets or long term ground leases
accounting for 45% of Q-Park's gross margin and an average
remaining contract life, including concessions and other contracts,
of around 50 years which provides good cash flow visibility, (2)
flexibility over pricing for a large part of its operations in
particular in parking facilities legally-owned or held under long
term leases, (3) Q-Park's focus on off-street and multi-functional
parking facilities protecting its competitive position in the
context of public policy increasingly directed towards reducing
on-street parking places, (4) the high degree of geographic
diversification with a presence in around 330 cities across 7
well-developed countries including The Netherlands, France and
Germany, and (5) a positive operating track-record as shown by an
annual 3.1% parking revenue growth between 2013 and September 2019
on a like for like basis (pro forma for the disposal of the Nordics
businesses), mainly supported by Q-Park's ability to increase
tariffs.
However, Q-Park's ratings also take into consideration : (1)
Q-Park's high leverage, which Moody's expects will now be
materially higher than the Moody's adjusted Debt/EBITDA ratio of
around 7.0x and Funds from operations (FFO)/Debt of around 10% that
had been expected prior to the current crisis, (2) uncertainties as
to the level of protection financial policy will provide creditors
given the lack of publicly stated leverage commitments, (3)
somewhat weaker flexibility and control over pricing under
concessions contracts in France where compensation mechanisms are
mostly reliant on negotiation with local governments, (4) execution
risk on Q-Park's growth strategy which relies for a large part on
its ability to further increase its pricing and yield by enhancing
value to its customers; and (5) some foreign currency exposure due
to the mismatch between non-EUR denominated cash flow generation in
the UK and Denmark (together accounting for 11% of Q-Park's gross
margin) and the EUR denominated debt service, in the absence of
hedging mechanisms.
LIQUIDITY AND DEBT COVENANTS
Q-Park's liquidity position was adequate prior to the coronavirus
outbreak. However, revenue decline as a result of mobility
restrictions will result in significantly lower cash flow. At
closing of the refinancing transaction in February the company had
EUR 30 million in cash and full availability under the EUR 250
million Revolving Credit Facility due in 2026, which has now been
almost fully drawn by the company to boost its cash position.
Q-Park does not face any debt maturities until 2025 when the EUR
425 million senior secured notes are due and Moody's expects the
company will be able to cover upcoming interest expenses and other
commitments with its available resources taking into account the
company's steps in reducing operating and capital expenditure.
Q-Park's notes documentation only includes covenants restricting
the payment of dividends or the incurrence of debt. Q-Park's RCF
also contains a springing leverage-based financial covenants which
becomes applicable once drawing under the RCF reaches 40% and is
tested quarterly. Against the marked deterioration in operating
performance Moody's expects that Q-Park will breach the covenant in
2020 (in the absence of equity cure or repayment of drawn amount),
although doing so will only result in a drawstop event which is
ineffective in the context of the RCF being almost fully drawn.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The outlook on Q-Park's ratings could move to stable in the
scenario of a sustainable improvement in the operating environment
and revenue recovery such that Q-Park is able to maintain a Moody's
adjusted Debt to EBITDA ratio of between 7.5x and 8.0x and an FFO
to Debt ratio of between 6% and 7% on a sustained basis.
Conversely Q-Park's ratings could be downgraded if Q-Park's Moody's
adjusted Debt to EBITDA ratio would likely remain above 8.0x and
FFO to Debt ratio visibly below 6% over the medium term. This could
result from an extension of mobility restrictions or a weaker than
anticipated recovery in demand for parking services. A
deterioration of Q-Park's liquidity profile would exert immediate
negative pressure on the ratings.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Privately
Managed Toll Roads published in October 2017.
COMPANY PROFILE
Q-Park is the largest private car-park operator in Europe by
revenues. The company operates over 454,000 parking spaces within
c.2,500 parking facilities located in 7 Western European countries
mainly in The Netherlands and France. Q-Park operates mainly
off-street parking facilities through legally-owned infrastructure
assets, long term lease and concession contract agreements. In May
2017 the company was acquired by a consortium of investment funds
led by Kohlberg Kravis Roberts & Co. LP. For the twelve months
ended September 2019 the company reported EUR 659 million and EUR
200 million in revenues and EBITDA respectively.
LIST OF AFFECTED RATINGS
Downgrades:
Issuer: Q-Park Holding B.V.
Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD
LT Corporate Family Rating, Downgraded to Ba3 from Ba2
Issuer: Q-Park Holding I B.V.
Senior Secured Regular Bond/Debenture, Downgraded to Ba3 from Ba2
Outlook Actions:
Issuer: Q-Park Holding B.V.
Outlook, Changed To Negative From Stable
Issuer: Q-Park Holding I B.V.
Outlook, Changed To Negative From Stable
===========
R U S S I A
===========
NCSP GROUP: S&P Affirms 'BB' Rating, Outlook Pos.
-------------------------------------------------
S&P Global Ratings affirmed its 'BB' rating on NCSP Group.
The global recession, challenging commodity markets, and oil price
cuts will weaken NCSP's 2020 performance in our view.
NCSP is Russia's largest cargo port and the third largest in
Europe, responsible for 17% of Russia's port cargo turnover. Most
of NCSP's cargo volumes represent commodity exports from Russia,
and global commodity markets are under pressure due to the COVID-19
pandemic. In particular, NCSP is responsible for about 28% of
Russian crude oil exports through ports, and Russia has recently
agreed to material oil production cuts. This makes NCSP more
exposed to unfavorable oil industry dynamics than other rated
infrastructure companies. In our base case scenario, we assume a
15% drop in cargo volumes and therefore also in revenues to $700
million-$730 million in 2020 from $866 million in 2019. S&P also
recognizes that COVID-19 could add pressure that are difficult to
quantify at this stage. This somewhat limits the rating upside in
the next several months.
S&P said, "We believe NCSP can retain healthy metrics despite the
global recession, thanks to solid financial headroom, high
profitability, and capex flexibility.
"We expect NCSP's S&P Global Ratings-adjusted EBITDA margin will
remain strong at 65%-70%, supported by U.S. dollar-denominated
tariffs and the weaker ruble, allowing the company to keep costs
low in dollar terms. In 2019, NCSP achieved solid metrics, with FFO
to debt at about 50%, backed by large cash balances--Russian ruble
(RUB) 35.5 billion (about $573 million as of Dec. 31, 2019)--from
its disposal of the Novorossiysk grain terminal last year.
Previously, we expected these proceeds would be distributed as
dividends in 2019. However, in line with the new strategy, about
the half might be invested in the port's assets. We expect $200
million of dividends in 2020, leaving some cash at the company's
disposal. The port has a flexible investment program, which might
be cut or delayed if cash flow generation weakens due to the global
economic downturn caused by the COVID-19 pandemic and the drop in
oil prices. We expect that NCSP's management could adjust operating
and capital expenditure (capex) to withstand a severe and prolonged
recession, and maintain healthy credit metrics, with FFO to debt
above 30% in 2020 and the coming years when a gradual recovery
starts."
Better visibility over NCSP's development strategy supports S&P's
view of improved management and governance practices.
NCSP's development strategy for 2020-2029, approved by Transneft,
aims to maintain NCSP's position as the largest Russian port
operator by gradually investing more than RUB100 billion in
technical upgrades and new projects, as well as keeping the port's
cargo diversification. S&P said, "We understand that the group does
not plan to divest any non-oil assets after the disposal of the
Novorossiysk Grain Terminal in 2019. We understand that any
investment decisions will be made on an individual basis,
considering market conditions, customers' future needs, and the
company's capability to fund the projects. We have therefore
revised our assessment of NCSP's management and governance to fair
from weak, and continue to monitor its strategy execution and capex
flexibility."
S&P views NCSP as a moderately strategic subsidiary of Transneft
and therefore incorporate a one-notch uplift in the long-term
rating.
NCSP's oil terminals in Novorossiysk and Primorsk represent a
natural extension of Transneft's core oil pipeline business. S&P
said, "Although NCSP represents only about 8% of the group's
consolidated EBITDA, we believe that Transneft considers these
assets' operational stability to be important for its core business
of pipeline transportation for oil exports. We also recognize that
Transneft only gained majority control of NCSP in late 2018, and
NCSP's operations and financials remain relatively autonomous."
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Strategy, execution, and monitoring
S&P said, "The positive outlook indicates that we could upgrade
NCSP if the company maintains solid performance, with FFO to debt
exceeding 30%. This will depend on the severity of the global
recession and decline of cargo volumes, which will stem from supply
and demand dynamics in different sectors, including oil production.
NCSP's credit metrics will also reflect mitigating measures,
including management of capex, operating expenses, dividend
distributions, and cash balances. For an upgrade the company's
liquidity must remain at least adequate.
"We could revise the outlook to stable if FFO to debt deteriorates
below 30% or liquidity weakened due to larger-than-expected capex
or dividend payments."
RN BANK: S&P Affirms BB+/B ICR Amid COVID-19 Containment Measures
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+/B' long- and short-term issuer
credit ratings on RN Bank JSC. The outlook is stable.
S&P said, "The affirmation reflects our expectation that RN Bank
will maintain sound financial profile over the next 12 months,
despite expected pressure on its clients from COVID-19 containment
measures in Russia. We believe the bank has prudent risk management
practices, substantial capital and earnings buffers, and its
shareholders' commitment to support its business development, which
should enable it to withstand the market turmoil.
"We expect that RN Bank will remain a strategically important
subsidiary of RCI Banque (BBB/Negative/A-2) and Nissan Motor Co.
(BBB+/Watch Neg/A-2) because it performs the important functions of
financing car sales and maintaining client loyalty of both Renault
and Nissan in Russia. We understand that Renault and Nissan have
invested significant resources in car production plants in Russia
and the Russian market is consistently among the top 5 markets in
car sales for the alliance. In addition, RN Bank remains an
important part of their strategy.
"We expect that RN Bank can maintain its loan portfolio in 2020
despite the expected reduction of car sales in Russia by about 15%.
This is because we forecast that the bank will increase its
financing of car sales at Avtovaz both in the retail and wholesale
segments. We also expect that the Russian government will provide
subsidies to Avtovaz's customers and lower-priced car models
produced by Renault, which should support RN Bank's business
volumes. RN Bank's share of the overall Russian banking sector is
still relatively small; with total assets of Russian ruble (RUB)
110 billion (about $1.64 billion), it ranked number 59 among more
than 450 Russian banks on March 1, 2020. At the same time, we note
that the bank's market share in the Russian auto loan segment was
9.6% on the same date.
"We expect RN Bank's asset quality will be under pressure in 2020
in view of the consequences of COVID-19 containment measures and
economic slowdown for the bank's corporate clients, in particular
auto dealers, and retail customers. We understand its auto-dealer
clients are currently allowed to defer interest and principal on
their bank loans in line with regulations of the Central Bank of
Russia. That said, we expect a gradual rebound toward the end of
2020. We see as positive RN Bank's currently good loan portfolio
quality and relatively short tenor of loans compared with peers',
which should provide a cushion if borrowers' creditworthiness
weakens and should help the bank adjust quickly once the economic
situation stabilizes. RN Bank's problem loans (those classified as
Stage 3 under IFRS 9) accounted for around 1.1% of total loans at
year-end 2019, which compares favorably with our estimate of the
Russian banking sector average: 7.8%-8.0% last year.
"We expect that RN Bank can maintain its strong capital and
earnings in the next two years. We forecast the bank's
risk-adjusted capital (RAC) ratio at 13.8%-14.0% during this
period, assuming flat loan portfolio dynamics in 2020 and annual
growth of 10%-15% in the subsequent two years, credit costs of
1.3%-2.0% of total loans, and no dividend payouts. We expect that
RN Bank can also maintain its good operating efficiency compared
with local peers' with the cost-to-income ratio staying at 24%-25%
versus the average of 39% for the 10 largest Russian banks in
2019.
"We believe that RN Bank's funding profile will continue to benefit
from ongoing shareholder support. We also expect that the bank will
keep its access to ample liquidity lines from the parent companies.
The bank's liquid assets accounted for around 8.0% of total assets
on April 1, 2020.
"The stable outlook reflects our view that RN Bank can maintain a
robust financial profile in the next 12 months, despite the
challenging operating environment in view of COVID-19 measures. We
believe the bank will continue benefitting from the ongoing
financial and management support from its shareholders. We also
expect capitalization to remain strong in the next two years,
supported by sound earnings, a modest risk appetite, and good loan
portfolio quality, with credit costs not exceeding 2% of total
loans, which is lower than the expected average for the Russian
banking sector.
"We could downgrade RN Bank if we saw a weaker ability of RCI
Banque or Nissan Motor to provide support. We could also take a
negative rating action if the shareholders' strategy for the
Russian market changed in such a way that we considered the
importance of RN Bank for either shareholder had weakened and
prospects for shareholder support had diminished.
"We would also consider lowering our ratings on RN Bank if its
stand-alone credit profile deteriorated due to declining capital,
with our RAC ratio falling below 10%, or if we observed material
asset-quality deterioration related to weakening creditworthiness
of auto dealers or retail borrowers. In addition, we could lower
the ratings if we considered that, contrary to our current
expectations, RN Bank's funding profile had deteriorated or its
liquidity management had weakened substantially.
"While not too likely, we could upgrade RN Bank in the next 12
months if it demonstrates the ability to sustain sound asset
quality, with nonperforming assets and loan loss provisions below
the average reported by most local peers, while delivering solid
operating results and maintaining strong capital. The continued
commitment and ability of shareholders to support the bank's
business development would also be required for a positive rating
action."
STATE TRANSPORT: S&P Alters Outlook to Neg. & Affirms 'BB/B' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on Russia-based State
Transport Leasing Co. PJSC (STLC) to negative from stable and
affirmed the 'BB/B' long-and short-term issuer credit ratings. The
ratings were subsequently withdrawn at the issuer's request.
S&P said, "The outlook revision to negative reflected our view of
the potential weakening of STLC's financial profile, particularly
its asset quality and capital position, due to the effects of the
COVID-19 pandemic on its customers--notably those in the aviation
industry. We also affirmed the ratings to reflect the strength of
STLC's business position and its important role for the Russian
government prior to the withdrawal.
"In our base case scenario, which includes more severe conditions
than the company previously experienced, we forecast a profit
decline, lower revenue, deferral of lease payments and potentially
weaker asset quality at STLC.
"We note that profitability is not the company's or its
shareholder's key priority, given its involvement in noncommercial
leasing and public role. However, the factors mentioned above might
have affected the company's capital position and our capital
projections. As of year-end 2019, risk adjusted capital (RAC) stood
at 5.8%, which was in line with our expectations but weaker than
two years ago. We believed that RAC could have deteriorated further
in the next 12-18 months due to effects related to COVID-19, which
would have triggered downward pressure on the rating. In our
base-case scenario, we envisaged government support in case of
need, in particular, a Russian ruble 14 billion capital injection
in 2020, according to the federal budget." Additional capital
support might have been extended, although the amount would largely
depend on how the macroeconomic situation evolves.
Although the leasing market remains very competitive, with a large
number of private and public sector players, STLC plays a unique
role in the government's import-substitution policy in the
transport sector, including aviation projects. Even in case of
lower leasing demand in the coming months, S&P considered that STLC
would be able to maintain this position, showing modest growth in
2020 and a partial rebound in 2021-2022.
The ratings on STLC reflected its public role in the modernization
and development of Russia's transport sector. The company has an
important role for the Russian government due to its policy
involvement and a very strong link with the government, which is
its full owner and has strong oversight of the business and
strategy.
The negative outlook at the point of withdrawal reflected the risk
of a deterioration in STLC's financial profile, notably its asset
quality and capitalization. In addition, S&P believed the
sustainability of STLC's business model could be under pressure in
view of the slowdown of the Russian economy.
At the same time, we expected that STLC would sustain its
significant public-policy role for the Russian government.
Before the withdrawal, S&P could have taken a negative rating
action within the next 12 months if:
-- S&P observed deterioration of lease portfolio quality, leading
to substantially weaker capitalization and a projected RAC ratio
below 5%.
-- S&P observed a weakening of STLC's risk management systems,
for example, via a pronounced deterioration of asset quality due to
one large borrower defaulting without a proper action plan from the
government, or to an elevation of residual value risk.
-- S&P considered that the likelihood of government support had
diminished, for example, because of the company's reduced
public-policy role.
Prior to the withdrawal, S&P could have revised the outlook to
stable if its observed significant improvement of lease portfolio
quality and sustainable new business growth. An additional capital
injection from the state might have served as evidence that,
despite weak financial results, the government would like STLC to
continue its activities and the relationship with the government
remained unchanged.
[*] Moody's Takes Action on 4 Russian Banks on Coronavirus Outbreak
-------------------------------------------------------------------
Moody's Investors Service took rating actions on four Russian
banks, namely Credit Europe Bank Ltd., National Standard Bank, NBD
Bank and Rosdorbank. Moody's affirmed the banks' Baseline Credit
Assessments, Adjusted BCAs and their long-term local and foreign
currency deposit ratings and changed the outlooks on the four
banks' long-term local and foreign currency deposit ratings to
stable from positive.
Concurrently, Moody's affirmed the four banks' long-term local and
foreign currency Counterparty Risk Ratings and their long-term
Counterparty Risk Assessments. The banks' short-term local and
foreign currency deposit ratings and short-term local and foreign
currency CRRs of Not Prime and short-term CR Assessments of Not
Prime(cr) were also affirmed.
RATINGS RATIONALE
Its rating action reflects the increasingly difficult operating
environment in Russia, stemming from a lengthy period of low oil
prices and the coronavirus outbreak, which will result in
additional hardship for a large array of banks' borrowers. This, in
turn, will lead to a weakening of Russian banks' solvency metrics,
in particular asset quality and profitability. For the four banks
affected by this rating action, for which Moody's had previously
expected positive developments in their credit profiles, the rating
agency now estimates that these positive developments are unlikely
to materialize in the next 12 to 18 months. This triggered Moody's
revision of the outlooks on the four banks' ratings to stable from
positive.
Since March 2020, Russian banking system has suffered from the oil
price plunge, which has resulted in local-currency depreciation, as
well as the coronavirus outbreak, which has led to unprecedented
social distancing measures taken by the government that will hurt
the domestic economy, in particular a large array of small and
medium-sized enterprises working in the segments of passenger
transport industry, tourism, nonfood retail, cafes, restaurants,
hotels and others. Concurrently, individuals employed in the
aforementioned sectors will also face financial difficulties.
Larger corporates in general remain more resilient to the current
economic slump; however, they will also face a reduction in
revenues resulting from weakened consumer demand. These factors
will ultimately weigh on the banks' asset quality and profitability
in 2020 and, potentially, in 2021.
Moody's expects that Russian banks' capital ratios will be stable
systemwide over the next 12 to 18 months despite the deterioration
in their profitability, mainly due to slower loan growth and
reduced dividend payouts. Russian banks' funding and liquidity
profiles will also remain broadly stable.
-- Credit Europe Bank Ltd. (Credit Europe)
The affirmation of Credit Europe's B1 deposit ratings and the
change of the ratings outlook to stable from positive reflects, on
the one hand, the bank's focus on unsecured consumer and auto
lending, which are vulnerable to the current economic slump, and on
the other hand, the bank's strong capital adequacy, which will
dampen the negative effects.
Credit Europe's loans are predominantly issued to individuals, with
unsecured consumer loans and auto loans representing 37% and 34% of
total gross loans, respectively, as of January 1, 2020. Moody's
expects that these sub-segments will be among those most affected
by the lockdown resulting from the coronavirus outbreak and the
broader economic slowdown, while the government-imposed grace
period will result in retail lenders losing or receiving late a
substantial portion of interest income. Moody's estimates that the
bank's moderate pre-provision profitability, at 3.1% of average
assets in 2019, will not be sufficient to absorb the expected
credit losses in 2020, so that Credit Europe will turn loss-making
this year. However, the key factor offsetting the potential
negative impact of increased loan losses on Credit Europe's credit
profile is the bank's strong capital cushion, with the ratio of
tangible common equity (TCE) to risk-weighted assets (RWAs) at
16.8% as of January 1, 2020.
The short-term nature of the bank's predominantly retail loan book
suggests that the bank's capital cushion will additionally benefit
from loan redemptions and limited new lending, which will reduce
RWAs. This trend will also support Credit Europe's liquidity
cushion, which was already solid at above 20% of tangible assets as
of January 1, 2020, the highest in five years.
-- National Standard Bank (NS Bank)
The affirmation of NS Bank's B3 deposit ratings and the change in
the outlook to stable from positive reflects, on the one hand, the
bank's focus on SME lending, which is more vulnerable to the
current economic slump, and on the other hand, the bank's sound
capital adequacy and ample liquidity, which will dampen the
negative effects.
NS Bank's loans are predominantly issued to SMEs. However, the
industry structure of the bank's loan book demonstrates a limited
exposure to the sub-segments most hit by the lockdown resulting
from the coronavirus outbreak, such as hotels, restaurants, nonfood
retail, transport and other leisure activities. Based on the bank's
management data, Moody's estimates that these sub-segments
accounted for approximately 11% of the bank's total loans as of
January 1, 2020. The bank's modest pre-provision profitability, at
just 1% of average assets in 2019, will likely offer limited
capacity to absorb the expected credit losses, driving Moody's
expectation that NS Bank will turn loss-making in 2020. However,
offsetting these factors is the bank's sound capital cushion, with
the ratio of TCE to RWAs at 14% as of January 1, 2020.
NS Bank's liquidity cushion is ample, at 36% of tangible assets as
of January 1, 2020, and its funding profile has recently improved,
as the bank significantly reduced its concentration on the largest
depositors and eliminated its historically high use of interbank
repurchase agreements.
-- NBD Bank (NBD)
The affirmation of NBD's Ba3 deposit ratings and the change of the
outlook to stable from positive reflects, on the one hand, the
bank's focus on SME lending, which is more vulnerable to the
current economic slump, and on the other hand, the bank's solid
pre-provision revenue generation and sound capital adequacy, which
will dampen the negative effects.
NBD's loans are predominantly issued to SMEs. However, the industry
structure of this loan book demonstrates a limited exposure to the
sub-segments most hit by the lockdown resulting from the
coronavirus outbreak, such as hotels, restaurants, nonfood retail,
transport and other leisure activities. Based on the bank's
management data, Moody's estimates that these sub-segments
accounted for less than 10% of the bank's total loans as of January
1, 2020. Instead, NBD's loan book is rather skewed to
manufacturing, which is expected to be less prone to asset quality
deterioration.
Other factors offsetting the potential negative impact of increased
loan losses on NBD's credit profile are the bank's solid
pre-provision profitability, underpinned by net interest margin
(NIM) of around 6%, as well as its ample capital cushion, with the
ratio of TCE to RWAs at 22% as of June 30, 2019.
-- Rosdorbank
The affirmation of Rosdorbank's B3 deposit ratings and the change
of the outlook to stable from positive reflects Moody's
expectations of the bank's break-even performance in the next 12 to
18 months, driven by an increase in problem loans that will
translate into elevated credit losses. These pressures and the
limited visibility of the bank's future asset performance are
offset by the recent RUB750 million capital injection, and the
currently limited balance sheet leverage.
As of March 1, 2020, Rosdorbank's regulatory common equity Tier 1
(CET 1) capital ratio stood at 11.2%, while the loan book accounted
for only around 4.0x of the bank's TCE. In addition, the bank's
loan book has limited exposure to the distressed sectors, such as
consumer loans and SMEs, and mainly comprises loans originated to
borrowers from the road servicing sector, agriculture, food trade
and real estate.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The banks have been
one of the sectors affected by this shock given an expected
deterioration in asset quality, profitability and capital
adequacy.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Its rating action reflects the impact on Russian banks
of the breadth and severity of the shock, and the pressure on
banks' credit profiles it has triggered.
For NS Bank and Rosdorbank, Moody's has also identified
related-party risks as the key governance risks. For these two
banks the rating agency applies a one-notch downward qualitative
adjustment for the corporate behavior aspect. For the other two
Russian banks affected by this rating action, Moody's does not
apply any corporate behavior adjustments as part of its rating
action, and does not have any specific concerns about their
corporate governance, which is, nevertheless, a key credit
consideration, as for most banks.
LIST OF AFFECTED RATINGS
Issuer: Credit Europe Bank Ltd.
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed b1
Baseline Credit Assessment, Affirmed b1
Short-term Counterparty Risk Assessment, Affirmed NP(cr)
Long-term Counterparty Risk Assessment, Affirmed Ba3(cr)
Short-term Counterparty Risk Rating, Affirmed NP
Long-term Counterparty Risk Rating, Affirmed Ba3
Short-term Bank Deposits, Affirmed NP
Long-term Bank Deposits, Affirmed B1, Outlook Changed To Stable
From Positive
Outlook Actions:
Outlook, Changed To Stable From Positive
Issuer: National Standard Bank
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed b3
Baseline Credit Assessment, Affirmed b3
Long-term Counterparty Risk Assessment, Affirmed B2(cr)
Short-term Counterparty Risk Assessment, Affirmed NP(cr)
Long-term Counterparty Risk Rating, Affirmed B2
Short-term Counterparty Risk Rating, Affirmed NP
Short-term Bank Deposits, Affirmed NP
Long-term Bank Deposits, Affirmed B3, Outlook Changed To Stable
From Positive
Outlook Actions:
Outlook, Changed To Stable From Positive
Issuer: NBD Bank
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed ba3
Baseline Credit Assessment, Affirmed ba3
Short-term Counterparty Risk Assessment, Affirmed NP(cr)
Long-term Counterparty Risk Assessment, Affirmed Ba2(cr)
Short-term Counterparty Risk Rating, Affirmed NP
Long-term Counterparty Risk Rating, Affirmed Ba2
Short-term Bank Deposits, Affirmed NP
Long-term Bank Deposits, Affirmed Ba3, Outlook Changed To Stable
From Positive
Outlook Actions:
Outlook, Changed To Stable From Positive
Issuer: Rosdorbank
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed b3
Baseline Credit Assessment, Affirmed b3
Long-term Counterparty Risk Assessment, Affirmed B2(cr)
Short-term Counterparty Risk Assessment, Affirmed NP(cr)
Long-term Counterparty Risk Rating, Affirmed B2
Short-term Counterparty Risk Rating, Affirmed NP
Short-term Bank Deposits, Affirmed NP
Long-term Bank Deposits, Affirmed B3, Outlook Changed To Stable
From Positive
Outlook Actions:
Outlook, Changed To Stable From Positive
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upgrades of the four affected banks' deposit ratings are unlikely
in the next 12 to 18 months given the current stable outlooks and
the lasting unfavourable operating conditions.
The affected banks' deposit ratings could be downgraded or the
ratings outlooks could be changed to negative from stable if the
banks' financial fundamentals, namely their asset quality,
capitalisation and profitability were to be eroded materially.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
=========
S P A I N
=========
AERNNOVA AEROSPACE: Bank Debt Trades at 21% Discount
----------------------------------------------------
Participations in a syndicated loan under which Aernnova Aerospace
SA is a borrower were trading in the secondary market around 79
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR100 million delay-draw term loan is scheduled to mature on
January 31, 2027. As of April 24, 2020, the full amount has been
drawn and is outstanding.
The Company's country of domicile is Spain.
AERNNOVA AEROSPACE: Bank Debt Trades at 22% Discount
----------------------------------------------------
Participations in a syndicated loan under which Aernnova Aerospace
SA is a borrower were trading in the secondary market around 78
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR390 million term loan is scheduled to mature on January 31,
2027. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
AERNNOVA AEROSPACE: Fitch Affirms B+ IDR, Alters Outlook to Neg.
----------------------------------------------------------------
Fitch Ratings has revised the Outlook on Spanish aerostructures and
components producer Aernnova Aerospace S.A.U.'s Long-Term Issuer
Default Rating to Negative from Stable and affirmed the IDR at
'B+'. Fitch has also has downgraded the senior secured rating to
'BB-'/'RR3' from 'BB'/'RR2'.
The Negative Outlook reflects pressure on Aernnova's credit metrics
due to the expected fall in demand from commercial aerospace
original equipment manufacturers, particularly its core customer,
Airbus, as a result of lower production output caused by the
coronavirus pandemic. This is likely to lead to a considerable
decline in funds from operations in 2020 and may lead to FFO
leverage being higher than Fitch previously expected in the next
two years for the rating, also above the 'B' mid-point under
Fitch's Navigator tool for the Aerospace & Defence sector. If key
credit ratios, including FFO leverage and free cash flow margin
remain above 6x and below 3%, respectively, beyond 2020, the
ratings are likely to be downgraded.
KEY RATING DRIVERS
Concentrated Customer Base: Aernnova's key customer is Airbus, from
which the company derives more than half of its revenue. This
presents high customer concentration risk, which will be realised
in 2020 due to the announced reduction in Airbus's aircraft
production. The key mitigating point, which will support Aernnova's
expected rebound in 2021, is the strong, long-term nature of the
relationship with Airbus. The numerous successful Airbus programmes
in which Aernnova participates and the difficulty in replacing
Aernnova in most programmes will support its cash flow generation
in long-term.
Airbus Demand Materially Affecting Operating Activity: The
reduction of airline capacity in 2020 due to global lockdowns
affects both OEMs and aerospace suppliers. Fitch expects severe
flight hour reductions in 2020 with a gradual recovery in global
air traffic in 2021. Moody's expects that this will negatively
impact Aernnova's operating activity due to the deferral and
cancellations of existing orders, which will result in financial
performance deterioration in 2020. Moody's expects that the company
will be able to gradually rebound from 2021 to its current
financial metrics.
Expected Spike in Leverage: The expected squeeze on FFO in 2020
will lead to a material deterioration in FFO gross and net leverage
far above its previous forecast of around 5.5x and 5.0x,
respectively. Nevertheless, Moody's considers this worsening in
leverage will be temporary and believe that underlying historically
robust cash flow generation will provide Aernnova with sufficient
deleveraging capacity.
Once the global aerospace industry normalises in 2021 Moody's
expects Aernnova's FFO gross and net leverage metrics to gradually
return to about 5.5x and 5.0x by 2022-2023, which will be a key
rating driver. These ratios are in line with the 'B' mid-points of
6x and 5x, respectively, under Fitch's Navigator tool for Aerospace
and Defense.
Limited Business Profile: The ratings are constrained by the
company's narrow scale of operations, characterised by low product
and end-market diversification, moderate commercial aerospace
programme concentration and a low share of revenue derived from
aftermarket activities. The company has some end-market exposure to
non-aerospace sectors such as automotive, although this is small.
Robust Underlying Cash Flows: Historically, Aernnova's cash flow
generation has been very strong for the rating over the last four
years, although it is not unusually high relative to some supplier
sector peers. The FFO margin was in the range of 14%-18% and the
FCF margin was over 3%, which is strong for the rating. The
expected deterioration of operating activity will stress FFO
generation and erode FCF in the short term. However, over the
medium term that Moody's expects these metrics will be broadly in
line with the 'B' mid-point under Fitch's Navigator tool for
Aerospace and Defense.
Capex is moderate at about 4%-5% of revenue and Moody's does not
expect the company to pay a regular dividend in the short to medium
term. Moody's believes that the company will be able to return to
the historical level of cash flow generation once the overall
market environment recovers in 2021. However, prolonged
deterioration in demand for aircraft is likely to have a negative
rating impact on Aernnova.
Revised Recovery Ratings: Aernnova's EUR490 million senior secured
term loan B has good recovery characteristics. Fitch has revised
the Recovery Rating to 'RR3'/'BB-' from 'RR2'/'BB' taking into
account the company's recent drawdown of a EUR25 million bilateral
loan, which dilutes the recovery for lenders of the TLB and
revolving credit facility.
Under Fitch's bespoke recovery analysis, Moody's takes a
going-concern approach, which Moody's estimates will lead to solid
recoveries for creditors given the company's long-term record and
sustainability of the business, long-term relationships with
customers, and historically healthy FCF generation. Moody's
believes that the company will be able to recover its solid cash
flow metrics in the medium term.
DERIVATION SUMMARY
Aernnova operates as a Tier1/Tier2 supplier in aerospace&defence
industry and has good long-term relationship with its key
customers, Airbus and Boeing.
Aernnova's FFO and FCF margins are comparable with those of 'BBB'
category peers, including MTU Aero Engines AG (BBB/Stable) and
Leonardo S.p.A. (BBB-/Stable), but lower than that of other
aerospace suppliers such as TransDigm Inc., which reports
double-digit margins due to production of more value-added
components. In terms of scale, Aernnova is considerably smaller
than rated peers.
Aernnova's rating is constrained by a historically weaker capital
structure in comparison with higher rated peers. Moody's expects
that the coronavirus shock will lead to a considerable temporary
rise in Aernnova's leverage and push FFO gross leverage to a level
higher than its negative sensitivity of 6.0x during 2020-2021.
Nevertheless, Moody's expects the company to recover fairly quick
based on strong underlying demand and leading market positions.
Aernnova's high leverage is not uncommon for companies in the 'B'
rating category and it compares favourably with peers such as
TransDigm with reported FFO gross leverage of 7.7x at end-2018 and
Al Convoy (Luxemburg) S.a.r.l. (B/Stable) with projected FFO gross
leverage of around 7.0x by end-2019.
No Country-Ceiling, parent/subsidiary or operating environment
aspects has an impact on the rating.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
- High single-digit decline of revenue 2020 as a result of
plunged demand from OEMs and quick recovery from 2021
- Pressed EBITDA margin in 2020 to around 10% as a result of a
deterioration in revenue generation accompanied by previously
agreed discounts with customers and lower profitability under
certain programmes, as well as the less profitable performance of
the acquired plant in the UK. A rebound of the EBITDA margin from
2021 to about 16% by 2023.
- Capex at 4%-5% of revenue over the medium term
- No M&A activity
- No regular dividend payments
Key Recovery Rating Assumptions:
- The recovery analysis assumes that the company would be
considered a going concern in bankruptcy and that it would be
reorganised rather than liquidated
- Its going-concern value is estimated at around EUR480 million
assuming distressed EBITDA of about EUR100 million
- A 10% administrative claim
- An enterprise value (EV) multiple of 5.5x is used to calculate
a post-reorganisation valuation, and is comparable with multiples
applied to other aerospace & defence peers
- Moody's deducts EUR72 million from the EV relating to the
company's various factoring facilities
- Moody's estimates the total amount of senior secured debt for
claims at EUR615 million, which includes a TLB of EUR490 million, a
RCF of EUR100 million and drawn bilateral loans of EUR25 million
- The principal waterfall results in 'RR3' recovery for senior
secured TLB and RCF
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Increased customer and end-market diversification
- Fitch-defined FFO gross leverage below 5x on a sustained basis
- FCF margin above 5% on a sustained basis
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Fitch-defined FFO gross leverage above 6x on a sustained basis
- FCF margin under 3% on a sustained basis
- FFO margin under 10%
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Still Good Liquidity: As of the beginning of April, the group has
fully drawdown a long-term TLB of EUR490 million attracted in
February 2020 and used for refinancing existing bank debt of about
EUR280 million reported at end-2019. In addition, the group drew
EUR35 million of an available committed RCF of EUR100 million and
attracted about EUR25 million of bilateral loans. To support its
liquidity amid the current vulnerable market environment, the
management decided to postpone dividends payment to shareholders.
Overall, currently the group holds around EUR275 million of
available cash (adjusted for about EUR5 million by Fitch) that is
more than sufficient to cover short-term amortisation of public
institution debt (up to EUR20 million) and potentially negative FCF
of about EUR20 million in 2020
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
DORNA SPORTS: Bank Debt Trades at 25% Discount
----------------------------------------------
Participations in a syndicated loan under which Dorna Sports SL is
a borrower were trading in the secondary market around 75
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD90 million term loan is scheduled to mature on April 12,
2024. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
GRUPO NEGOCIOS: Bank Debt Trades at 17% Discount
------------------------------------------------
Participations in a syndicated loan under which Grupo Negocios de
Restauracion del Sur SL is a borrower were trading in the secondary
market around 83 cents-on-the-dollar during the week ended Fri.,
April 24, 2020, according to Bloomberg's Evaluated Pricing service
data.
The EUR5 million term loan is scheduled to mature on December 27,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
IMAGINA MEDIA: Bank Debt Trades at 16% Discount
-----------------------------------------------
Participations in a syndicated loan under which Imagina Media
Audiovisual SA is a borrower were trading in the secondary market
around 84 cents-on-the-dollar during the week ended Fri., April 24,
2020, according to Bloomberg's Evaluated Pricing service data.
The EUR142 million term loan is scheduled to mature on June 22,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
IMAGINA MEDIA: Bank Debt Trades at 37% Discount
-----------------------------------------------
Participations in a syndicated loan under which Imagina Media
Audiovisual SA is a borrower were trading in the secondary market
around 63 cents-on-the-dollar during the week ended Fri., April 24,
2020, according to Bloomberg's Evaluated Pricing service data.
The EUR184 million term loan is scheduled to mature on June 28,
2025. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
PIOLIN BIDCO: Bank Debt Trades at 21% Discount
----------------------------------------------
Participations in a syndicated loan under which Piolin BidCo SAU is
a borrower were trading in the secondary market around 79
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR970 million term loan is scheduled to mature on September
17, 2026. As of April 24, 2020, the full amount has been drawn and
is outstanding.
The Company's country of domicile is Spain.
PROMOTORA DE: Bank Debt Trades at 22% Discount
----------------------------------------------
Participations in a syndicated loan under which Promotora de
Informaciones SA is a borrower were trading in the secondary market
around 78 cents-on-the-dollar during the week ended Fri., April 24,
2020, according to Bloomberg's Evaluated Pricing service data.
The EUR161 million term loan is scheduled to mature on December 31,
2022. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
PROMOTORA DE: Bank Debt Trades at 24% Discount
----------------------------------------------
Participations in a syndicated loan under which Promotora de
Informaciones SA is a borrower were trading in the secondary market
around 76 cents-on-the-dollar during the week ended Fri., April 24,
2020, according to Bloomberg's Evaluated Pricing service data.
The EUR957 million term loan is scheduled to mature on November 30,
2022. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
SENA DIRECTORSHIP: Bank Debt Trades at 16% Discount
---------------------------------------------------
Participations in a syndicated loan under which Sena Directorship
SAU is a borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR63 million term loan is scheduled to mature on April 7,
2023. As of April 24, 2020, the full amount has been drawn and is
outstanding.
The Company's country of domicile is Spain.
[*] Moody's Takes Action on 4 Spanish Banks on Coronavirus Outbreak
-------------------------------------------------------------------
Moody's Investors Service took actions on four Spanish banks. The
outlooks on the long-term deposit and senior unsecured debt ratings
of Bankia S.A. as well as the long-term deposit ratings of
Liberbank have been changed to negative from stable. At the same
time, the outlooks on the long-term deposit ratings of ABANCA
Corporacion Bancaria, S.A. and Ibercaja Banco S.A. were changed to
stable from positive.
Its rating actions reflect the deteriorating operating environment
from the coronavirus outbreak in Spain and the associated downside
risks to the standalone credit profiles of Bankia, Liberbank and
Abanca, as well as limited upside potential for that of Ibercaja.
The Baseline Credit Assessments of these four Spanish banks are
particularly exposed to:
- Worsening asset quality: despite the large support package put in
place by the Spanish government as well as the supervisory measures
decided by the European Central Bank, the rating agency expects an
increase in problem loans and the cost of risk as households and
companies struggle to deal with their sudden change in economic
circumstances, and;
- Deteriorating profitability: bottom line results will likely come
under pressure from rising loan loss provisions, lower lending and
fee-related business volumes, and continued margin pressure as very
low interest rates persist. The rating agency expects that the
increase in loan loss provisions will be greater the longer the
coronavirus outbreak lasts and also that Spanish banks have limited
scope for counterbalancing cost cuts, with some leeway to reduce
non-essential investment.
RATING ACTIONS OVERVIEW
OUTLOOK CHANGE TO NEGATIVE
- Bankia: The outlooks on the bank's Baa2 long-term deposit
ratings and on the Baa3 long-term senior unsecured debt ratings
were changed to negative from stable. All ratings and assessments
were affirmed.
- Liberbank: The outlook on Liberbank's Ba2 long-term deposit
rating was changed to negative from stable. All ratings and
assessments were affirmed.
OUTLOOK CHANGE TO STABLE
- Abanca: The outlook on Abanca's Ba1 long-term deposit ratings
was changed to stable from positive. All ratings and assessments
were affirmed.
- Ibercaja: The outlook on the bank's Ba3 long-term deposit
ratings was changed to stable from positive. All ratings and
assessments were affirmed.
The ratings and rating assessments of all other rated Spanish banks
are not affected by its rating actions.
RATINGS RATIONALE
Spain is one of the countries that has been most heavily impacted
by the coronavirus, which Moody's expects will have a very
disruptive impact on the country's economy. The rating agency has
changed the outlooks of Bankia, Liberbank, Abanca and Ibercaja to
reflect the challenges on their intrinsic financial strength in
light of the deteriorating operating environment. Moody's regards
the coronavirus outbreak as a social risk under its Environmental
Social and Governance framework, given the substantial implications
for public health and safety.
Moody's views Bankia's and Liberbank's BCAs as more vulnerable to a
deterioration of their credit profiles, and hence has changed the
outlook on their ratings to negative from stable. While the same
vulnerability affects Abanca's BCA, the negative pressure on its
deposit ratings is offset by expected changes in the bank's balance
sheet structure, whereby deposits could benefit from a higher
protection against losses according to Moody's Advanced Loss-Given
Failure analysis, underpinning the stable outlook. By stabilizing
the outlook on the ratings of Ibercaja, the rating agency aims to
reflect the challenges that the bank will face to maintain the
improving trend on its financial profile, principally in terms of
asset quality.
ASSET QUALITY AND PROFITABILITY WILL DETERIORATE
The very rapid spread of the coronavirus outbreak has led Spain to
enforce strict and widespread limitations on movement which will
have a material impact on the country's economy, affecting both
corporate and individuals, with more acute consequences for the SME
sector as well as self-employed, which account for a significant
portion of banks' loan portfolios.
Moody's therefore expects Spanish banks' asset quality and
profitability to weaken due to higher problem loans, even though
the duration of the disruption and its implications for the overall
economy and the Spanish banking system are dependent upon the
containment of the virus and gradual recovery of the economic
activity, which remains difficult to predict.
To some extent, the economic consequences will be mitigated by
government actions. On March 18, the Spanish government approved a
support package (Royal Decree Law 8/2020) that included specific
measures for the banking system. The package included the
introduction of state guarantees for an amount of up to EUR100
billion as well as some unemployment benefits and extraordinary
subsidies for individuals and self-employed. The government also
approved payment deferrals on mortgage loans, which Moody's viewed
as credit negative for Spanish banks' asset quality and
profitability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of Bankia's and Liberbank's ratings is unlikely given
the current negative outlook, while the stabilization of Abanca's
and Ibercaja's outlooks limits the potential of higher ratings.
A downgrade of the four banks' ratings would likely be driven by a
lower BCA. A BCA downgrade could be driven by an expectation of a
deterioration in Spain's operating environment, leading to a
worsening of these banks' asset quality and profitability and
reduced loss-absorption capacity.
Changes to the banks' liability structures could also have an
impact of the banks' ratings.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
=====================
S W I T Z E R L A N D
=====================
BREITLING HOLDINGS: S&P Cuts CHF564MM Term Loan Rating to 'B-'
--------------------------------------------------------------
S&P Global Ratings lowered its ratings on Breitling Holdings
S.a.r.l. and its CHF 564 million Term Loan B to 'B-' from 'B'.
S&P said, "The COVID-19 pandemic will interrupt Breitling's solid
growth and push up leverage, which we now expect to reach 9x-10x in
FY 2021 Breitling reported solid performance in the last quarters
of FY 2020. In the 11 months to Feb. 29, 2020, net sales increased
20% to about CHF530 million with a balanced contribution from
organic and external growth thanks to the integration of acquired
agents and distributors. In the same period, Breitling's
management-adjusted EBITDA margin was roughly 20.7% of net sales,
up from 19% the previous year due to higher penetration of the
direct-to-consumer channel and higher average sale prices. Despite
the coronavirus outbreak in China (mainland China accounts for
about 4% of sales), in the first quarter of 2020, we believe the
company was well positioned to post higher-than-expected
performance, with S&P Global Ratings-adjusted leverage slightly
below our previous forecast of 6.5x-7.0x. However, the spread of
the virus in Europe and the U.S. will likely hamper deleveraging.
We now expect S&P Global Ratings-adjusted debt to EBITDA to remain
above 7.0x over FY 2021-FY 2022, reaching 9x-10x in FY 2021, which
is commensurate with the 'B-' rating."
Containment measures, global recession, and lower consumer
confidence will affect demand of luxury watches this year.
Containment measures imposed by governments across Europe and the
U.S., including the shutdown of stores, will immediately affect
sales at the company's retail network, which accounts for 15% of
sales. S&P said, "We estimate that Breitling generated about 40% of
total sales in Europe in FY 2020, and 20% in the U.S. It has
limited exposure to duty free shops (less than 1% of sales as of
March 31, 2020), which will suffer from ongoing travel
restrictions. However, we believe Breitling's wholesale
operations--accounting for 80% of sales (equally split between
third-party distributors, and shop-in-shops/corners)--will suffer
the most. Many distributors and watch retailers will face
significant financial and liquidity stress due to the current
situation and we expect potential deterioration of trade terms and
reduced orders to avoid overstocking. As a result, we expect
Breitling's sales to remain affected even after the containment
measures are lifted. We estimate Breitling's sales will decline by
20%-25% in FY 2021, since we expect a global recession and in such
an environment consumers would likely cut back on discretionary
spending."
Cash preservative measures will prevent a significant drop in
profitability in FY 2021 and should preserve liquidity. S&P said,
"We believe Breitling should not suffer material liquidity stress
in the next 12 months because it has Swiss franc (CHF) 140
million-CHF145 million of cash available on the balance sheet as of
March 31, 2020. This cash balance reflects a combination of solid
performance reported last year, measures to preserve cash started
at the end of FY2020, and CHF73 million in drawings from the CHF80
million revolving credit facility (RCF) as a precaution. In
addition, for the current year, we expect the S&P Global
Ratings-adjusted EBITDA margin at Breitling to reduce to 21%-22%
from 24%-25% estimated in FY 2020. This is due to lower operating
leverage being partly mitigated by cost-savings initiatives, which
mainly include staff cost reduction, lease savings, and significant
cuts on discretionary marketing expenses also thanks to the
cancelation of many key events such as Baselworld 2020. In
addition, we anticipate some expansionary projects could be
delayed, such as the opening of new shops. We understand
investments in IT could be prioritized to support online sales,
which could represent an important channel for future growth but
currently accounts for roughly 3% of Breitling's sales."
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. Some
government authorities estimate the pandemic will peak about
midyear, and S&P is using this assumption in assessing the economic
and credit implications. S&P believes the measures adopted to
contain COVID-19 have pushed the global economy into recession. As
the situation evolves, S&P will update its assumptions and
estimates accordingly.
S&P said, "The stable outlook reflects our estimate that over the
next 12 months Breitling can manage its liquidity needs, thanks to
the CHF140 million-CHF145 million in cash available on the balance
sheet. At the same time, we expect S&P Global Ratings-adjusted
EBITDA interest coverage to remain above 2.0x by the end of FY
2021.
"We could lower the rating if headroom on the financial covenant
reduces further, leading us to see a higher risk of a covenant
breach. This could occur if there were a prolonged disruption
linked to COVID-19 and a quicker-than-expected deterioration of the
company's liquidity position. Additionally, we could take a
negative rating action if S&P Global Ratings-adjusted debt to
EBITDA increases and exceeds 10x for a sustained period, leading us
to regard the capital structure as unsustainable.
"We could upgrade Breitling if its credit metrics improved and S&P
Global Ratings-adjusted debt to EBITDA reduces sustainably below
7.0x while free operating cash flow remains positive. Under this
scenario, we would expect adequate covenant headroom of more than
15%. This could happen if demand for Breitling's watches proves
more resilient to the macroeconomic shocks than we currently
forecast for the current year."
===========
T U R K E Y
===========
ANTALYA METROPOLITAN: Fitch Affirms LT IDRs at BB-, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Antalya Metropolitan Municipality's
Long-Term Foreign- and Local-Currency Issuer Default Ratings at
'BB- 'with Stable Outlooks.
The affirmation reflects Fitch's expectations that Antalya will
maintain its operating performance, although it may be adversely
affected by rising costs and subdued growth prospects due to the
coronavirus pandemic in 2020-2021, due to the local economy's
dependence on tourism. Fitch expects Antalya to maintain its cost
discipline for generating stable operating balance at TRY700
million, which will help the city's primary debt sustainability
ratio (debt to operating balance) remain below 5x in the medium
term.
Fitch's ratings are forward-looking in nature, and Fitch will
monitor developments in the public sector for coronavirus pandemic
severity and duration, and incorporate revised base- and
rating-case qualitative and quantitative inputs based on
performance expectations and assessment of key risks.
KEY RATING DRIVERS
Revenue Robustness (Weaker)
The Weaker assessment results from the cyclical nature of Antalya's
local economy, which is to a large extent dependent on the tourism
sector, making the city less resilient to economic shocks. Fitch
therefore expects the city's local economy to be adversely affected
by the coronavirus pandemic in 2020-2021, and to then rebound over
the medium term. Antalya benefits from a buoyant and dynamic tax
revenue base. The city is the seventh-largest GDP contributor per
capita and accounting for on average 3% of national GDP, but the
cyclicality of its local economy leads to a less diversified tax
revenue base with a higher volatility.
Antalya's main revenue source is tax revenues, such as personal
income tax, corporate income tax and VAT, linked to its local
economic performance. These taxes are collected by the central
government within the boundaries of the city and redistributed by a
predefined formula. At end 2019 they accounted for 61% of operating
revenue, followed by intergovernmental transfers by the central
government (21.8%) and charges and fees (16.1%)
Revenue Adjustability (Weaker)
Antalya's ability to generate additional revenues is constrained by
the nationally predefined tax rates. Cities have very limited
rate-setting power over own local taxes such as property tax,
natural gas and electricity consumption tax, advertisement and
promotion, fire insurance and entertainment providing little or no
leeway to absorb unexpected fall in revenue.
Expenditure Sustainability (Midrange)
Fitch expects Antalya to maintain cost control in the medium term,
which would contribute to generating sound operating margins of
30%. Fitch expects higher costs for 2020/21 due to the coronavirus
pandemic which Fitch expects to ease over the medium term. After
becoming a metropolitan city, Antalya increased its capex to nearly
40% of total expenditure from 14% in 2012 with moderately cyclical
to countercyclical responsibilities in the provision of urban
infrastructure investments similar to other large metropolitan
municipalities. At end-2019, Antalya's capex accounted for 37.5 %
of total expenditure followed by goods and services and staff
costs.
Expenditure Adjustability (Midrange)
Fitch has re-assessed Expenditure Adjustability for Antalya to
'Midrange' from 'Weaker' amid international peer analysis showing
the low share of inflexible costs which account for less than 70%
on average of its total expenditure, as investments can be cut down
or postponed in light of the fairly good level of existing
socio-economic infrastructure. Self-financing of capital spending
underpins flexibility but is counterbalanced by the weak track
record of balanced budget, due to large swings in capex
realisations.
Liabilities and Liquidity Robustness (Weaker)
Antalya's debt management policy has significant risks, as a
significant share of its total debt, 61.3% at -end 2019 is in euros
and unhedged, exposing the city to significant FX risk. At
end-2019, the Turkish lira had depreciated by 10.26% yoy against
the euro, increasing total debt by TRY121.8 million
The city's debt consists of bank loans and is amortising. The
weighted average maturity of its total debt is moderate at 4.6
years, with 13% of its debt maturing within one year increasing
refinancing pressure. The majority of its bank loans have fixed
interest rates, mitigating interest rate risk exposure. The city is
not exposed to material off balance sheet risks.
Liabilities and Liquidity Flexibility (Weaker)
At end-2019, Antalya's year end cash remained weak covering less
than 1x its debt servicing. In Turkey, LRGs do not benefit from
treasury lines or cash pooling on a national level, making it
challenging to fund unexpected rise of debt liabilities or peaks of
spending.
Debt Sustainability Assessment: 'aa'
Under Fitch's stressed rating case for 2020-2024 due to the
coronavirus pandemic, Antalya will continue to maintain its payback
ratio below five years, leading to a debt sustainability ratio of
'aa' due to a weaker debt service coverage below 1.
DERIVATION SUMMARY
A 'Weaker' risk profile combined with 'aa' debt sustainability
leads to a Standalone Credit Profile (SCP) in the 'bb' category.
With a debt service coverage above 1 and debt burden on average at
120% compared with its national and international peers in the same
rating category the notch specific SCP is positioned at the mean
bound of the category at 'bb' and compressed to 'BB-' IDR in
application of the sovereign cap(BB-/Stable). In its assessment,
Fitch does not apply extraordinary support from the upper-tier
government or asymmetric risk,
KEY ASSUMPTIONS
Fitch's rating case scenario is a "through-the-cycle" scenario,
which incorporates a combination of revenue, cost and financial
risk stresses. It is based on the 2015-2019 figures and 2020-2024
projected ratios.
The key assumptions for the scenario in 2020-2024 include:
- Tax revenue nominal growth rate at CAGR 14.8%
- Operating expenditure growth rate at CAGR 10.4%
Fitch's rating case envisages the following stress compared with
the base case:
- Stress on the tax revenue growth rate by- 1.1% yoy
- Stress on the opex growth rate by +1.1% yoy
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
An upgrade of Turkey's IDRs would lead to an upgrade of Antalya
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
A downgrade of Turkey's IDRs would lead to a downgrade of Antalya
as would a payback ratio above five years.
BEST/WORST CASE RATING SCENARIO
Ratings of Public Finance issuers have a best-case rating upgrade
scenario (defined as the 99th percentile of rating transitions,
measured in a positive direction) of three notches over a
three-year rating horizon; and a worst-case rating downgrade
scenario (defined as the 99th percentile of rating transitions,
measured in a negative direction) of three notches over three
years. The complete span of best- and worst-case scenario credit
ratings for all rating categories ranges from 'AAA' to 'D'. Best-
and worst-case scenario credit ratings are based on historical
performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Antalya has an ESG Relevance Score of '4' for Public Safety and
Security: Due to the high dependency of the local economy on
tourism, the city is highly sensitive to public safety and security
issues.
=============
U K R A I N E
=============
UKRAINE: Fitch Affirms 'B' LT IDR, Alters Outlook to Stable
-----------------------------------------------------------
Fitch Ratings has revised the Outlook on Ukraine's Long-Term
Foreign-Currency Issuer Default Rating to Stable from Positive and
affirmed the IDR at 'B'.
Under EU credit rating agency regulation, the publication of
sovereign reviews is subject to restrictions and must take place
according to a published schedule, except where it is necessary for
CRAs to deviate from this in order to comply with their legal
obligations. Fitch interprets this provision as allowing us to
publish a rating review in situations where there is a material
change in the creditworthiness of the issuer that Fitch believes
makes it inappropriate for us to wait until the next scheduled
review date to update the rating or Outlook/Watch status. The next
scheduled review date for Fitch's sovereign rating on Ukraine will
be September 4, 2020, but Fitch believes that developments in the
country warrant such a deviation from the calendar and its
rationale for this is laid out below.
KEY RATING DRIVERS
HIGH
The revision of Ukraine's Outlook to Stable reflects the
significant impact of the COVID-19 pandemic on Ukraine's growth and
fiscal accounts. The heightened macroeconomic and fiscal risks
associated with this unprecedented global shock will partially
reverse Ukraine's improvements in recent years in terms of a
declining debt burden, the normalisation of growth prospects after
the 2014-2015 geopolitical and economic crises, and reduced growth
volatility.
Fitch forecasts the economy will contract by 6.5% in 2020, compared
with 3.2% growth in 2019, reflecting the COVID-19 pandemic shock to
the global economy, containment measures and a weaker currency
affecting investment and private consumption. Consumption will be
further hindered by the expected decline in household remittances
(7.8% of GDP in 2019). The shock will be partly cushioned by
Ukraine's low reliance on tourism, relatively more diversified
commodity exports (including 40% soft commodities) and lower
international oil prices given its net importer status. Fitch
expects the economy to recover to 3.5% in 2021, in line with its
medium-term growth view for Ukraine. However, there are material
downside risks to its forecasts, given the uncertainty around the
extent and duration of the coronavirus outbreak.
The government introduced containment measures in mid-March and
further tightened the quarantine in early April until at least the
end of the month. The economic policy response to the COVID-19
pandemic includes National Bank of Ukraine FX sales in mid-March,
provision of liquidity to the financial sector and temporary
regulatory forbearance for banks.
Fitch forecasts the general government deficit to rise to 7.1% of
GDP in 2020, up from 2.0% in 2019 and the original target of 2.1%,
reflecting lower tax collection, increased social and health
spending and the formation of a coronavirus fund (1.6% of GDP).
Fitch notes that the final size of the deficit will depend on
available financing, especially from official sources, and spending
execution not directly related to the health crisis and social
support. Fitch expects the fiscal deficit to decline to 3.4% in
2021, as revenues recover in tandem with the economy and nominal
spending remains roughly stable against 2020.
General government debt will jump to 57.1% of GDP (64.0% of GDP
including guarantees) and 57.4% in 2021, from 44.4% (50.4% with
guarantees) in 2019 and close to the forecast 60% 'B' median, due
to the wider deficit and sharp hryvnia depreciation (forecast at
25% yoy in 2020). Fitch also expects some rollback in the progress
of reducing currency risks on the sovereign balance sheet (59%
foreign-currency denominated in 2019), as its base case foresees
the government meeting most of its financing needs in foreign
currency.
Ukraine's track record of fiscal prudence (primary surpluses in
2015-2019), the expectation of new multi-year IMF program, and
relatively limited financing alternatives to sustain large deficits
underpin Fitch's expectation that Ukraine returns to a primary
fiscal surplus consistent with debt reduction in 2022.
Ukraine´s IDRs also reflect the following key rating drivers:
Ukraine is currently in discussions with the IMF to increase and
frontload disbursements under the previously agreed (at the staff
level) USD5.5 billion three-year Extended Fund Facility (EFF). In
recent weeks, Ukraine has made progress in required prior actions
for final approval by the IMF's board including passing land market
reform, albeit with some dilution, and the amended 2020 budget. Key
legislation to strengthen the bank resolution framework was
approved at first reading in early April and a final legislative
vote could take place in the near term.
Fitch maintains its baseline scenario that Ukraine will obtain
final IMF board approval for a new program in 1H20, but further
delays cannot be ruled out. Risks to the EFF's approval and
implementation stem from Ukraine's weak track record in completing
previous programs, potentially negative judicial rulings that lead
to reform reversals, execution risks after reforms are approved in
parliament, disruptive cabinet overhauls, increased fragmentation
of the President's party Rada representation and the influence of
still powerful oligarchs and other vested interests.
Fitch considers that the IMF agreement is essential for Ukraine to
meet increased 2020 fiscal financing needs of USD20 billion (USD9.9
billion debt amortisation), as program disbursements will likely be
directed towards budget support, unlock additional official
financing and improve investor sentiment. Ukraine has obtained 18%
of financing (including the issue of a EUR1.25 billion in early
2020) year to date. Available domestic liquidity and government
cash holdings provide some room to meet near-term debt commitments.
Foreign investors' share in the local market has declined but
remains high at 22.4%, down from 26.2% in February, reflecting
redemptions and relatively low sales in the secondary market due to
low liquidity. Fitch expects Ukraine's increased policy credibility
and consistency and continued cooperation with the IMF will
preserve the gains in terms of macroeconomic stability and mitigate
balance of payments pressures.
The NBU cut its policy rate by 100bp to 10% amid heightened
financial markets volatility in March. Subdued inflationary
pressures and continued IMF cooperation will likely allow the NBU
to continue its easing cycle. Low inflation (2.3% yoy in March) and
the recent recovery in the hryvnia combined with weaker domestic
demand will moderate the pass-through from the March depreciation.
Fitch expects inflation to average 5.3% in 2020 and 5.9% in 2021,
somewhat above the forecast 5.0% and 4.5% 'B' medians but in line
with the NBU's inflation target (5% plus or minus 1% in 2020).
After strengthening by 14% versus the US dollar in 2019, the
hryvnia depreciated sharply in mid-March, reflecting heightened
risk aversion and panic-related FX demand. The NBU allowed the
exchange rate to adjust but intervened to smooth volatility with
net sales totalling USD2.2 billion in March. However, the monetary
authority has returned to a net purchaser position during the last
three weeks.
Fitch expects international reserves to fall to USD22.9 billion in
2020, down from USD25.3 billion at the end of 2019, reflecting
public debt repayments and weaker non-official capital inflows.
Reserve coverage will improve to four months of current external
payments (CXP), due to a 21% contraction in the denominator.
External liquidity, measured by the ratio of the country's liquid
external assets to its liquid external liabilities, will rise to
93% for 2020 below the 122% for the 'B' median.
External financing needs are high (58% of international reserves)
due to large debt repayments. External sovereign amortisations
(government plus NBU) will rise to USD5 billion in 2020 and USD4.8
billion in 2021 (external bond repayments averaging USD2.4
billion). Fitch expects the current account deficit to remain low
at 2.2% of GDP in 2020, as resilience in food commodity exports
(40% of total), declining prices for energy and commodity imports,
contracting domestic demand and the reduction in the travel
services deficit will partly mitigate the expected decline in
remittances inflows.
The NBU's policy response to increased volatility has reduced risks
to financial stability but the weaker macroeconomic outlook will
likely lead to asset quality deterioration, from an already high
level, thus increasing the risk of additional fiscal costs in terms
of capitalisation requirements for state-owned banks. NPLs are high
(48.75% of total loans although 90% covered by provisions) and
concentrated in state-owned banks (60% of total system assets).
Deposit (41%) and loans (41.3%) dollarisation remains high and some
of the recent progress could be reversed in the short term.
The government under President Zelensky maintains strong popular
support but its political position has weakened somewhat,
especially in the Rada, as resistance to reform from vested
interests and oligarchs has delayed and watered down reform
legislation. Recent unexpected and frequent cabinet changes,
especially those related to key economic positions such as Minister
of Finance, has not derailed cooperation with the IMF, but risks
creating uncertainty regarding policy direction amid a challenging
external environment.
In Fitch's view, the Zelensky administration remains committed to
achieving a resolution to the conflict with Russia and maintains a
constructive tone. Nevertheless, Fitch has yet to perceive a
significant shift in the Ukrainian and Russian positions regarding
key issues such as the control of the conflict area and borders
with Russia, the status of the temporarily occupied territories in
the Donetsk and Luhansk regions and the timing and type of
elections in those territories.
ESG - Governance: Ukraine has an ESG Relevance Score (RS) of 5 for
both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption, as
is the case for all sovereigns. Theses scores reflect the high
weight that the World Bank Governance Indicators (WBGI) have in its
proprietary Sovereign Rating Model. Ukraine has a low WBGI ranking
at 29 percentile, reflecting the conflict with Russia in the East
of the country, weak institutional capacity, uneven application of
the rule of law and a high level of corruption.
SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Ukraine a score equivalent to a
rating of 'B' on the Long-Term Foreign-Currency IDR scale.
Fitch's sovereign rating committee did not adjust the output from
the SRM to arrive at the final LT FC IDR.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
RATING SENSITIVITIES
The main factors that could, individually or collectively, lead to
positive rating action/upgrade are:
- General government debt/GDP returning to a firm downward path
over the medium term, for example due to a post-coronavirus-shock
fiscal consolidation
- Reduction in external financial vulnerabilities, for example
due to a strengthened external balance sheet and greater financing
flexibility.
- Increased confidence that progress in reforms will lead to
improvement in governance standards and higher growth prospects
while preserving the improvements in macroeconomic stability.
The main factors that could, individually or collectively, lead to
negative rating action/downgrade:
- Increased external financing pressures or increased
macroeconomic instability, for example stemming from failure to
agree an IMF program or delays to disbursements from it.
- Persistent increase in general government debt, for example due
to a more pronounced and longer period of fiscal loosening,
economic contraction or currency depreciation
-Sustained external or political/geopolitical shocks that weaken
the macroeconomic stability, growth prospects and Ukraine's fiscal
and external position.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Public Finance issuers have a
best-case rating upgrade scenario (defined as the 99th percentile
of rating transitions, measured in a positive direction) of three
notches over a three-year rating horizon; and a worst-case rating
downgrade scenario (defined as the 99th percentile of rating
transitions, measured in a negative direction) of three notches
over three years. The complete span of best- and worst-case
scenario credit ratings for all rating categories ranges from 'AAA'
to 'D'. Best- and worst-case scenario credit ratings are based on
historical performance.
KEY ASSUMPTIONS
Fitch does not expect resolution of the conflict in eastern Ukraine
or escalation of the conflict to the point of compromising overall
macroeconomic performance.
Fitch assumes that the debt dispute with Russia will not impair
Ukraine's ability to access external financing and meet external
debt service commitments.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Ukraine has an ESG Relevance Score of 5 for Political Stability and
Rights as World Bank Governance Indicators have the highest weight
in Fitch's SRM and are highly relevant to the rating and a key
rating driver with a high weight. A major escalation of the
conflict in the East of Ukraine represents a risk.
Ukraine has an ESG Relevance Score of 5 for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and in the case of Ukraine weaken the business environment and
investment prospects; this is highly relevant to the rating and a
key rating driver with high weight.
Ukraine has an ESG Relevance Score of 4 for Human Rights and
Political Freedoms as strong social stability and voice and
accountability are reflected in the World Bank Governance
Indicators that have the highest weight in the SRM. They are
relevant to the rating and a rating driver.
Ukraine has an ESG Relevance Score of 4 for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Ukraine, as for all sovereigns.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or to the way in which they
are being managed by the entity(ies).
===========================
U N I T E D K I N G D O M
===========================
BLACKMORE BOND: FCA Warned 3 Years Ago of Misleading Marketing
--------------------------------------------------------------
Michael O'Dwyer at The Telegraph reports that the City watchdog was
warned three years ago about misleading marketing of investments
designed by collapsed savings firm Blackmore Bond.
According to The Telegraph, regulators were sent concerns in 2017
about how the firm's high-interest products were being advertised
to investors by a partner business -- but Blackmore continued
trading until earlier this month, when its failure left over 2,000
investors at risk of losing up to GBP45 million.
The Financial Conduct Authority (FCA) was contacted by Paul
Carlier, a former banker who advises businesses on disputes with
their lender, The Telegraph discloses. He wrote to its
whistleblowing team in March 2017 raising concerns about the
marketing of Blackmore Bond's investments by another firm, Amyma,
The Telegraph relays.
CPUK FINANCE: Fitch Places 'B' Class B Notes Rating on Watch Neg.
-----------------------------------------------------------------
Fitch Ratings has placed CPUK Finance Limited class A notes rated
'BBB' and class B notes rated 'B' on Rating Watch Negative.
RATING RATIONALE
The RWN reflects the limited visibility of CPUK's future cash flow
generation resulting from the UK government's recent restrictions
on public gatherings, mobility and social interactions in order to
curb the spread of the coronavirus.
Fitch therefore expects CPUK's debt service coverage to be impacted
by a severe but short-lived demand shock related to the pandemic,
although the scale and duration of the impact is still broadly
uncertain.
The liquidity position looks comfortable for 2020 and CPUK has some
financial flexibility to partially offset potential short-term
revenue shortfall. It currently assumes a progressive recovery by
2021 but will revise its rating case if the severity and duration
of the pandemic are greater than expected.
KEY RATING DRIVERS
Coronavirus Affecting Demand
The rapid spread of the coronavirus is leading to an unprecedented
impact on leisure businesses as government lockdown measures are
enforced that prevent people from leaving their homes. These
measures mean revenues may fall to zero while the measures remain
in place. The potential extent of the near-term stresses is
unprecedented. The impact on revenue increased during March as the
UK government ordered all non-essential businesses to close and a
full countrywide lockdown.
Under its revised Fitch rating case (FRC), Fitch assumes yoy
substantial revenue declines in 2Q20, with some knock-on effect
through to end-2020 and a progressive recovery by 2021-2022 to
levels similar to 2019.
Defensive Measures
CPUK has some flexibility to partially offset the impact of the
expected significant revenue shortfall. In its revised rating case,
Fitch assumes a significant reduction in fixed costs to reflect the
period of full closure, during which Fitch believes it will be
possible to significantly reduce most components of operating
expenditure. It also assumes some reduction in maintenance and
investment capex as it can be reduced to minimum covenanted levels.
It also believes it may be possible to reduce capex further as any
capex shortfall versus covenant could be made up later in the year
as holiday villages start to re-open.
Credit Metrics - Recovery from 2021
The updated FRC results in longer repayment profile and higher
leverage. The projected deleveraging profile envisages class A and
B full repayment by 2031 and 2037 respectively, which is worse than
FRC 2019 full repayment by 2031 and 2036. Expected leverage profile
also deteriorates with net debt to EBITDA by 2023 at 4.7x and 7.6x
for classes A and B, respectively.
After the 2020 shock, CPUK's projected cash flows progressively
should recover from the impact, which indicates a temporary
impairment of the group's credit profile. This reflects its view
that demand levels within the leisure sector will return to normal
in the medium to long-term. However, Fitch has closely monitoring
developments in the sector as CPUK's operating environment has
substantially worsened and Fitch will revise the FRC if the
severity and duration of the pandemic is longer than expected.
Solid Liquidity Position
CPUK has sufficient liquidity to cover at least 2020 needs. At the
beginning of March CPUK had GBP34 million in cash and liquidity
facility totaling GBP90 million available for senior fees and A
note interest payments, while scheduled debt service stood at
GBP91.3 million in 2020 and GBP91.2 million in 2021. Closest
expected maturity date is in 2022 for class B3 of GBP480 million.
Fitch believes CPUK has sufficient time to refinance class B3 well
in advance.
Sensitivity Case
Fitch has also run a more severe sensitivity case, which builds on
FRC, and assumes the crisis worsens materially from current levels
with a longer demand shock versus the revised FRC, resulting in
significant revenue reductions during 2020. Mitigation measures
remain unchanged compared with the FRC. The sensitivity shows that
under this scenario projected deleveraging profile envisages class
A and B full repayment by 2031 and 2037 and net debt to EBITDA by
2023 at 4.7x and 7.6x, respectively. The unchanged metrics compared
to FRC is due to the debt service profile and structural features
of the securitization.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch does not anticipate an upgrade as reflected in the RWN. A
quicker-than-assumed recovery from the demand shock, supporting a
sustained recovery in cash flows generation would allow us to
resolve the RWN and potentially assign a Stable Outlook.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A drawdown on a liquidity facility for debt service.
Class A notes:
- A deterioration of the expected leverage profile with net debt
to EBITDA above 5.0x by 2023;
- A full debt repayment of the notes beyond 2031 under Fitch's
rating case.
Class B notes:
- A deterioration of the expected leverage profile with net debt
to EBITDA above 8.0x by 2023;
- A full debt repayment of the notes beyond 2037 under Fitch's
rating case.
BEST/WORST CASE RATING SCENARIO
Best/Worst Case Rating Scenarios - Global Infrastructure:
Ratings of global infrastructure issuers have a best-case rating
upgrade scenario (defined as the 99th percentile of rating
transitions, measured in a positive direction) of three notches
over a three-year rating horizon; and a worst-case rating downgrade
scenario (defined as the 99th percentile of rating transitions,
measured in a negative direction) of three notches over three
years. The complete span of best- and worst-case scenario credit
ratings for all rating categories ranges from 'AAA' to 'D'. Best-
and worst-case scenario credit ratings are based on historical
performance.
TRANSACTION SUMMARY
CPUK Finance Limited is a securitization of five holiday villages
in the UK operated by Center Parcs Limited. The holiday villages
are Sherwood Forest in Nottinghamshire, Longleat Forest in
Wiltshire, Elveden Forest in Suffolk, Whinfell Forest in Cumbria
and Woburn Forest in Bedfordshire. Each site has around 860 villas
and is set in a forest environment with extensive central leisure
facilities.
Key Rating Drivers - Summary Assessments
- Industry Profile - Weaker
- Sub-KRDs: Operating Environment - Weaker; Barriers to Entry -
Midrange; Sustainability - Midrange
- Company Profile - Stronger
- Sub-KRDS: Financial Performance - Stronger; Company Operations
- Stronger; Transparency - Stronger; Dependence on Operator -
Midrange; Asset Quality - Stronger
- Debt Structure: Class A - Stronger; Class B - Weaker
- Sub-KRDs: Debt Profile: Class A - Stronger; Class B - Weaker;
Security Package: Class A - Stronger;
Class B - Weaker; Structural Features: Class A - Stronger; Class B
- Weaker.
As indicated, the coronavirus pandemic and related government
containment measures worldwide create an uncertain environment for
the leisure sector in the near term. While CPUK's most recent
performance data may not have indicated significant impairment so
far, material changes in revenue and cost profile are occurring
across the broader UK leisure sector and likely to worsen in the
coming weeks and months as economic activity suffers and government
restrictions are maintained or broadened. Fitch's ratings are
forward-looking in nature, and Fitch will monitor developments in
the sector for the severity and duration of the crisis and its
impact, and incorporate revised base- and rating-case qualitative
and quantitative inputs based on expectations for future
performance and assessment of key risks.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
ELYSIUM HEALTHCARE: Bank Debt Trades at 18% Discount
-----------------------------------------------------
Participations in a syndicated loan under which Elysium Healthcare
Holdings 3 Ltd is a borrower were trading in the secondary market
around 82 cents-on-the-dollar during the week ended Fri., April 24,
2020, according to Bloomberg's Evaluated Pricing service data.
The GBP24 million facility is a delay-draw term loan. It is
scheduled to mature on April 4, 2025.
The Company's country of domicile is Great Britain.
GEORGE BEST: Enters Into Administration Following Delays
--------------------------------------------------------
BBC News reports that The George Best Hotel in Belfast has gone
into administration without ever opening its doors.
The project, being developed by the Liverpool-based Signature
Living group, had been beset by problems before the current
economic crisis, BBC relates.
A number of its other projects have been placed into administration
in recent weeks, BBC discloses.
Signature, led by Lawrence Kenwright, arrived in Belfast in 2017
promising to develop five hotels.
The George Best Hotel in the city centre was the only project which
saw significant work, BBC notes.
However, it faced a series of delays and its opening date was
continually pushed back, BBC states.
According to BBC, investors who had bought individual rooms in the
hotel had difficulty getting their promised returns.
Matthew Ingram -- matthew.ingram@duffandphelps.com -- and Michael
Lennon of Duff & Phelps have been appointed as joint
administrators, BBC relays.
INTERSERVE PLC: Administration Work Extended Until March 2022
-------------------------------------------------------------
David Price at Construction News reports that finalizing the
administration of Interserve PLC has been delayed, partly due to
the coronavirus pandemic.
Disposal of a 49% stake in a Qatari business owned by the old
Interserve parent company has been delayed by COVID-19 restrictions
in the Gulf state, Construction News discloses. According to
Construction News, to complete the deal, administrators from EY
need tax clearance from the Qatari authorities, a process they
described as "complex and time-consuming". EY, as cited by
Construction News, said this has been made more difficult by "a
lockdown initiated due to COVID-19" and tax-processing changes in
Qatar.
A two-year extension to the administration until March 2022 has
been granted to give EY the time to complete the disposal and
calculate how much the collapsed PLC owed HMRC, Construction News
says. The tax liability depends on the outcome of the disposal,
Construction News notes.
According to Construction News, the disposal focuses on
Interserve's stake in Qatari-based Al Binaa Contracting Company.
In its last set of filed accounts for 2018, Interserve valued the
stake at GBP2.7 million, Construction News discloses.
Interserve PLC was placed into administration on March 15, 2019,
after shareholders voted down a deleveraging plan, resulting in its
subsidiary companies being sold to the group's lenders in a
pre-pack administration, Construction News recounts. This led to
debt of GBP815 million and other liabilities of more than GBP200
million being effectively wiped out by stakeholders in exchange for
equity in the new parent company, Interserve Group Limited,
Construction News notes.
EY said secured creditors of Interserve PLC, owed around GBP65.2
million, are not expected to receive any payout from the
administration, Construction News relays.
L1R HB: Moody's Cuts CFR & Sr. Sec. Credit Facility Rating to 'Caa1
-------------------------------------------------------------------
Moody's Investors Service has downgraded to Caa1 from B3 the
corporate family rating and to Caa1-PD from B3-PD the probability
of default rating of L1R HB Finance Limited, the parent and 100%
owner of "Holland & Barrett". In addition, Moody's has downgraded
to Caa1 from B3 the ratings on the company's Backed Senior Secured
credit facilities. The outlook on the ratings was changed to stable
from negative.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook and falling retail sales are
creating a severe and extensive credit shock across many sectors,
regions and markets. The combined credit effects of these
developments are unprecedented. Moody's expects the UK retail
sector will be one of the sectors to be significantly affected by
the shock given its exposure to increasing restrictions on movement
and sensitivity to consumer demand and sentiment. Its action
reflects the expected impact on Holland & Barrett of the breadth
and severity of the shock, and the broad deterioration in credit
quality Moody's expects it will trigger.
The performance of the company in the five months of fiscal 2020 to
February 2020 was above Moody's expectations and Moody's
understands that its trading in March was ahead of budget despite
the effects of the coronavirus emergency. Holland & Barrett was
deemed an essential retailer in all core markets except Belgium (2%
of company's sales in fiscal 2019), and most of its 1,099 stores
remain open. Nevertheless, the rating agency expects the company's
sales to have been materially dented by the restrictions to
personal movement introduced by governments from mid-March, even if
demand for key lines and online fulfilment has been strong. With
movement restrictions currently ongoing the rating action was
prompted by Moody's expectation of a significant decline in offline
sales, only partly compensated by an increase in online sales, over
the course of fiscal 2020, ending September 2020, which will result
in a lower EBITDA, a weakening liquidity profile and a
deterioration in credit metrics. Moody's base case assumes a 35%
decline in sales and cost of goods sold and a 25% reduction in
operating expenses. On this basis, the rating agency estimates
leverage, measured in terms of Moody's adjusted gross debt to
EBITDA, stood at 7.8x as of February 29, 2020 (including operating
leases calculated using a five times multiple of current rents), up
from 7.6x as of September 30, 2019 and compared to Moody's
expectations between 6x-7x for the previous B3 rating. Moody's does
not currently expect it to recover below 7x in fiscal 2021.
More positively, the rating also reflects Holland & Barrett's focus
on the growing but competitive market for health and wellness
products. The offerings are mostly led by Vitamins, Minerals, Herbs
and Supplements (VHMS), a category in which the company has a
strong market position, complemented by its Food category (fruits,
nuts, seeds and snacks, specialist food and drink), ethical beauty
and sports nutrition. The company has a trusted brand offering and
an extensive store network across the UK and Ireland, with an
increasing international presence.
LIQUIDITY
Moody's considers Holland & Barrett's current liquidity capable of
supporting the company through fiscal 2020 under the rating
agency's base case assumptions. However, a more severe or extended
downside with sales depressed more severely than currently assumed
would likely add pressure on the company's current liquidity. The
company's term loan interest payments of around GBP11 million
quarterly fall due in March, June, September and December each
year.
In this context, Moody's expects Holland & Barrett to take further
actions to strengthen its liquidity, including any available
funding support from the UK Government in the form of delayed value
added tax payments and business rates relief. Like many other
retailers, some financial support may potentially also materialize
from ongoing discussions with landlords in the form of rent
deferrals. In terms of freehold properties, the rating agency
understands that the group owns property (lands and buildings)
valued GBP40 million as at September 2019.
Moody's views the company's liquidity profile as currently adequate
but rapidly weakening given the negative free cash flow generated
during fiscal 2019 and the lower cash balance at the end of the
period compared to expectations. The company had GBP44.3 million of
cash on balance sheet at February 29, 2020 before paying GBP3.5
million in monitoring fee and GBP11 million of interest in March.
The minimum cash requirements are likely well below the GBP20
million previously assumed for day-to-day fluctuations.
A GBP75 million revolving credit facility (RCF) expiring in 2023
was undrawn as at February 29, 2020. The facility is subject to a
net leverage covenant tested quarterly only when the facility is
drawn by more than 35%. The headroom under the covenant will
significantly reduce from around 10% reported as February 29, 2020.
Although any potential drawings of the facility would at least
temporarily increase gross leverage, it would also clearly improve
the liquidity buffer available to the company. Holland & Barrett
has no material debt maturities until the 2024 maturity of the term
loan B.
STRUCTURAL CONSIDERATIONS
Holland & Barrett's reported debt comprises a GBP825 million term
loan B, split between a GBP450 million and a euro-denominated
GBP375 million equivalent tranche both due in 2024, as well as the
RCF maturing in 2023. Both the term loan and the RCF rank pari
passu and are guaranteed by all material subsidiaries with more
than 5% of EBITDA or gross assets.
RATING OUTLOOK
The stable outlook reflects Moody's expectations, in the agency's
base case scenario, that the company will maintain sufficient
liquidity and that its leverage will recover to around 7.0x-7.5x by
fiscal 2021 after a temporary spike over 8x in fiscal 2020.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings are unlikely to be upgraded in the short term. Positive
rating pressure would not arise until the coronavirus outbreak is
brought under control, the risks associated with movement
restrictions lowered, and footfall returns to more normal levels.
At this point Moody's would evaluate the balance sheet and
liquidity strength of the company and positive rating pressure
would require evidence that the company is capable of substantially
recovering its financial metrics and restoring liquidity headroom
within a 1-2 year time horizon.
Downward pressure could develop if the pandemic results in a more
severe impact on the operating performance, which could further
deteriorate Holland & Barrett's liquidity profile and lead to an
unsustainable capital structure.
Moody's understands that the company's credit agreement has been
amended in 2019 and allow its shareholder to purchase H&B's debt on
a bilateral basis. A potential debt buyback, if material, would be
considered as distressed exchanges, which is a default under
Moody's definition.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. From a governance perspective the main risks are the
highly leveraged capital structure and the lower reporting
requirements typical of private companies compared with listed
ones.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Retail Industry
published in May 2018.
Holland & Barrett is a chain of health food shops with around 1,100
stores, mainly located in the UK but also in The Netherlands,
Sweden, Ireland and Belgium. Headquartered in Nuneaton, England,
the company is owned by LetterOne, a privately-owned investment
vehicle founded in 2013 by five Russian investors. The largest
individual shareholder is Mikhail Fridman.
LIBERTY SIPP: Enters Administration Following Insolvency
--------------------------------------------------------
Neil Hodgson at TheBusinessDesk.com reports that Bury-based Liberty
SIPP is in administration.
The Financial Conduct Authority (FCA) has confirmed that directors
of the SIPP (self-invested personal pension) provider appointed
Andrew Poxon -- andrew.poxon@leonardcurtis.co.uk -- and Alex
Cadwallader -- alex.cadwallader@leonardcurtis.co.uk -- of Leonard
Curtis as joint administrators, on April 27, TheBusinessDesk.com
relates.
Following a number of binding decisions from the Financial
Ombudsman Service, the company was advised that it was insolvent,
based on the number of potential claims relating to high-risk
non-standard investments, TheBusinessDesk.com discloses.
According to TheBusinessDesk.com, it was advised it should enter
administration to provide protection for creditors including former
customers.
Liberty Sipp used to administer some 12,800 SIPPS, working with 745
advice firms across the UK, TheBusinessDesk.com states.
The Liberty SIPP Limited business and customer assets were sold to
EBS Pensions Limited, part of the Embark Group, in October 2018,
TheBusinessDesk.com recounts.
The legal entity Liberty SIPP Limited was not part of this sale
and, as a consequence, no longer has any customer assets under
administration, according to TheBusinessDesk.com.
PUNCH TAVERNS: Moody's Cuts Class A7 Notes Rating to B1
-------------------------------------------------------
Moody's Investors Service has downgraded the ratings of three
classes of Notes issued by Punch Taverns Finance B Limited.
GBP201M (current balance GBP 99.8M) A3 Notes, Downgraded to B1
(sf); previously on Oct 9, 2014 Upgraded to Ba3 (sf)
GBP220M (current balance GBP 208.8M) A6 Notes, Downgraded to B1
(sf); previously on Oct 9, 2014 Upgraded to Ba3 (sf)
GBP250M (current balance GBP 135.5M) A7 Notes, Downgraded to B1
(sf); previously on Oct 9, 2014 Downgraded to Ba3 (sf)
RATINGS RATIONALE
The rating actions follow the complete closure of the company's pub
and bar estate in compliance with government regulations, and the
resulting potential adverse impact on the company's operations and
financial profile in the near and medium term.
Moody's analysis has considered the highly uncertain and negative
outcome of the coronavirus outbreak on the UK economy as well as
the specific fallout of the government measures to contain the
virus on the performance of pub companies. It regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety. It
is a global health shock, which makes it extremely difficult to
provide an economic assessment. The degree of uncertainty around
Moody's forecasts is unusually high.
In particular with the company's earnings in the short term all but
drying up, the debt service metrics will come under substantial
pressure, there may be material build-up of debt , and the
company's pub disposal programme will be subject to interruptions
and delays. For now, the extent and timing of easing of social
distancing measures remains highly uncertain.
The downgrade to B1 (sf) reflects (a) Moody's base case
expectations that the company will emerge from the closure period
with additional debt and a weaker credit profile; (b) a lack of
certainty over whether the coronavirus will have a lasting impact
on the way people choose to socialise, potentially negatively
affecting volumes of pub-goers and in turn Punch Finance B's
profitability and ability to deleverage; and (c) the operational
challenges of resuming trading after a period of shutdown.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Operating
Company Securitizations Methodology" published in April 2020.
Factors that would lead to an upgrade or downgrade of the ratings:
A main factor that could lead to an upgrade of the ratings is
evidence of an operating environment that will be supportive for
the company recording underlying performance in line with pre
crisis levels.
Main factors or circumstances that could lead to a downgrade of the
ratings are a materially weaker operating environment or credit
metrics than anticipated prior to the Covid-19 outbreak.
RADNORSHIRE ARMS: Bought Out of Administration by Allworks
----------------------------------------------------------
Katherine Price at The Caterer reports that The Radnorshire Arms
hotel in Presteigne, Powys, has been sold out of administration to
Allworks Properties.
The 19-bedroom, Grade II-listed property, which has been empty for
over a year, was one of two that fell into administration in 2018
under the umbrella of Leisure & Developments, The Caterer
discloses. The company also owned the 16-bedroom Knighton hotel,
also in Powys, which was sold in September 2019, The Caterer
notes.
The sale was negotiated by Colliers, acting on the instructions of
Damian Webb -- damian.webb@rsmuk.com -- and Diana Frangou --
diana.frangou@rsmuk.com -- of RSM Restructuring Advisory, as joint
administrators of Leisure & Development, The Caterer states.
RAY CAR: Bank Debt Trades at 24% Discount
------------------------------------------
Participations in a syndicated loan under which Ray Car Carriers
Ltd is a borrower were trading in the secondary market around 76
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The $110 million facility is a term loan. It is scheduled to
mature on February 21, 2024.
The Company's country of domicile is the Isle of Man.
VUE INTERNATIONAL: Bank Debt Trades at 28% Discount
----------------------------------------------------
Participations in a syndicated loan under which Vue International
Bidco PLC is a borrower were trading in the secondary market around
72 cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR114 million facility is a delay-draw term loan. It is
scheduled to mature on June 21, 2026.
The Company's country of domicile is Great Britain.
===============
X X X X X X X X
===============
ARVOS HOLDING: Bank Debt Trades at 30% Discount
------------------------------------------------
Participations in a syndicated loan under which Arvos Holding GmbH
is a borrower were trading in the secondary market around 70
cents-on-the-dollar during the week ended Fri., April 24, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR293 million term loan is scheduled to mature on August 29,
2021. As of April 24, 2020, EUR284 million from the loan remains
outstanding.
The Company's country of domicile is Germany.
*********
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