/raid1/www/Hosts/bankrupt/TCREUR_Public/240514.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
Tuesday, May 14, 2024, Vol. 25, No. 97
Headlines
D E N M A R K
SUSTAINABLE PROJECTS: Raises Going Concern Doubt, Cites Losses
I R E L A N D
CANYON EURO 2023-1: S&P Assigns B- (sf) Rating to Class F Notes
CARLYLE EURO 2024-1: S&P Assigns B- (sf) Rating to Class E Notes
FAIR OAKS V: S&P Assigns B- (sf) Rating to EUR10.50MM Cl. F Notes
HARVEST CLO XVIII: S&P Affirms 'B- (sf)' Rating on Class F Notes
I T A L Y
MILTONIA MORTGAGE: Moody's Assigns B2 Rating to EUR51.7MM F Notes
L U X E M B O U R G
ALTICE INTERNATIONAL: S&P Lowers LT ICR to 'B-', Outlook Negative
MANGROVE LUXCO: S&P Ups Sr. Sec. Notes Rating to 'B-', Outlook Neg.
S P A I N
PERALTA INVERSIONES: Moody's Assigns First Time 'B2' CFR
PERALTA INVERSIONES: S&P Rates New Senior Secured Term Loan B 'B'
S W E D E N
HILDING ANDERS: Invesco Dynamic Marks EUR5.2MM Loan at 59% Off
HILDING ANDERS: Invesco Dynamic Marks EUR5.5MM Loan at 100% Off
HILDING ANDERS: Invesco Dynamic Marks EUR5MM Loan at 100% Off
T U R K E Y
TURKCELL ILETISIM: S&P Upgrades ICR to 'BB-', Outlook Positive
U N I T E D K I N G D O M
AEA INTERNATIONAL: Moody's Affirms Ba3 CFR, Outlook Remains Stable
BUILDING SOLUTIONS: Goes Into Liquidation Following Fraud
CENTRICA PLC: S&P Rates New Subordinated Hybrid Securities 'BB+'
FARFETCH LTD: S&P Downgrades ICR to 'D' Then Withdraws Rating
GORDON HOTELS: Owes More Than GBP17 Million, Documents Show
JORDAN ALEXANDER: Put Into Liquidation
LA VIE: Enters Liquidation, Owes GBP44,850 to Creditors
MOLOSSUS BTL 2024-1: S&P Assigns BB+ (sf) Rating to F-Dfrd Notes
NEVER WHAT IF: Plans to Build Plymouth Hoe Hotel Still on the Cards
PREFERRED 05-2: S&P Affirms 'BB (sf)' Rating on Class D1c Notes
PUDLO PRODUCTS: Bought Out of Administration
- - - - -
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D E N M A R K
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SUSTAINABLE PROJECTS: Raises Going Concern Doubt, Cites Losses
--------------------------------------------------------------
Sustainable Projects Group Inc. disclosed in a Form 10-Q Report
filed with the U.S. Securities and Exchange Commission for the
quarterly period ended March 31, 2024, that substantial doubt
exists about its ability to continue as a going concern.
According to the Company, it has limited revenue and has sustained
operating losses, resulting in a deficit. The Company said the
realization of a major portion of its assets is dependent on its
continued operations, which in turn is dependent upon its ability
to meet financing requirements and the successful completion of the
Company's planned lithium production facility.
The Company has accumulated a deficit of $4,232,365 since inception
and has yet to achieve profitable operations and further losses are
anticipated in the development of its business.
During the three months ended March 31, 2024, the Company had a net
loss of $872,608, compared to a net loss of $392,032 in the same
prior fiscal year period.
The Company had $399,945 in cash as of March 31, 2024. The Company
will need to raise additional cash in order to fund ongoing
operations over the next 12 months. The Company may seek additional
equity as necessary, and it expects to raise funds through private
or public equity investment in order to support its existing
operations and expand the range of its business. There is no
assurance that such additional funds will be available for the
Company on acceptable terms, if at all.
A full-text copy of the Company's Form 10-Q is available at
https://tinyurl.com/35mhehrv
About Sustainable Projects
Aalborg, Denmark-based, Sustainable Projects Group Inc. is a
pure-play lithium company focused on supplying high performance
lithium compounds to the fast-growing electric vehicle and broader
battery markets.
As of March 31, 2024, the Company has $2,393,357 in total assets,
$3,007,058 in total liabilities, and $613,701 in total
stockholders' deficit.
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I R E L A N D
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CANYON EURO 2023-1: S&P Assigns B- (sf) Rating to Class F Notes
---------------------------------------------------------------
S&P Global Ratings assigned credit ratings to Canyon Euro CLO
2023-1 DAC's class A-1 and A-2 loans and class A to F European cash
flow CLO notes. The issuer also issued unrated subordinated notes.
Under the transaction documents, the rated debt (loans and notes)
pays quarterly interest unless a frequency switch event occurs.
Following this, the rated debt will permanently switch to
semiannual payments.
The portfolio's reinvestment period will end approximately five
years after closing, while the non-call period will end two years
after closing.
The ratings reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior-secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated debt through collateral selection, ongoing
portfolio management, and trading. S&P has assessed this following
the application of its operational risk criteria.
-- The transaction's legal structure, which S&P considers to be
bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio benchmarks
CURRENT
S&P weighted-average rating factor 2,880.88
Default rate dispersion 501.56
Weighted-average life (years) 4.51
Weighted-average life (years) extended
to cover the length of the reinvestment period 5.18
Obligor diversity measure 123.83
Industry diversity measure 22.74
Regional diversity measure 1.23
Transaction key metrics
CURRENT
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 2.91
Covenanted 'AAA' weighted-average recovery (%) 37.55
'AAA' weighted-average recovery (%) (target recovery) 37.47
'AAA' weighted-average recovery (%) (actual recovery) 37.74
Actual weighted-average spread (net of floors; %) 4.26
Actual weighted-average coupon (%) 4.70
S&P said, "The portfolio is well-diversified, primarily comprising
broadly syndicated speculative-grade senior-secured term loans and
senior-secured bonds. Therefore, we have conducted our credit and
cash flow analysis by applying our criteria for corporate cash flow
CDOs.
"In our cash flow analysis, we used the EUR550 million target par
amount, the weighted-average spread (4.26%), and the
weighted-average coupon (4.70%). We also assumed the actual
weighted-average recovery rate for all rating levels. We applied
various cash flow stress scenarios, using four different default
patterns, in conjunction with different interest rate stress
scenarios for each liability rating category.
"Our credit and cash flow analysis show that the class B-1, B-2, C,
D, E, and F notes benefit from break-even default rate and scenario
default rate cushions that we typically consider to be in line with
higher ratings than those assigned. However, as the CLO is still in
its reinvestment phase, during which the transaction's credit risk
profile could deteriorate, we have capped our ratings on the
notes.
"Until the end of the reinvestment period on July 15, 2029, the
collateral manager may substitute assets in the portfolio for so
long as our CDO Monitor test is maintained or improved in relation
to the initial ratings on the notes. This test looks at the total
amount of losses that the transaction can sustain as established by
the initial cash flows for each rating and compares that with the
current portfolio's default potential plus par losses to date. As a
result, until the end of the reinvestment period, the collateral
manager may through trading deteriorate the transaction's current
risk profile, if the initial ratings are maintained.
"Under our structured finance sovereign risk criteria, we consider
that the transaction's exposure to country risk is sufficiently
mitigated at the assigned rating levels.
"We consider that the transaction's documented counterparty
replacement and remedy mechanisms adequately mitigate its exposure
to counterparty risk under our current counterparty criteria.
"The transaction's legal structure and framework is bankruptcy
remote, in line with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for the class A
to F debt.
"In addition to our standard analysis, to indicate how rising
pressures among speculative-grade corporates could affect our
ratings on European CLO transactions, we have also included the
sensitivity of the ratings on the class A to E debt based on four
hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category--and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met--we have not included the above scenario analysis results
for the class F notes."
Environmental, social, and governance
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit assets from being related
to certain activities, including, but not limited to the production
of controversial weapons; marijuana related businesses; hazardous
chemicals, pesticides and wastes, ozone depleting substances,
endangered wildlife; pornography or prostitution; tobacco or
tobacco related products; subprime lending or payday lending
activities; weapons or firearms; and thermal coal extraction.
Accordingly, since the exclusion of assets from these industries
does not result in material differences between the transaction and
our ESG benchmark for the sector, no specific adjustments have been
made in our rating analysis to account for any ESG-related risks or
opportunities."
Ratings list
AMOUNT
CLASS RATING* (MIL. EUR) SUB (%) INTEREST RATE§
A AAA (sf) 202.30 38.00 Three/six-month EURIBOR
plus 1.53%
A-1 Loan AAA (sf) 113.70 38.00 Three/six-month EURIBOR
plus 1.53%
A-2 Loan AAA (sf) 25.00 38.00 Three/six-month EURIBOR
plus 1.53%
B-1 AA (sf) 53.00 27.00 Three/six-month EURIBOR
plus 2.25%
B-2 AA (sf) 7.50 27.00 5.70%
C A (sf) 33.00 21.00 Three/six-month EURIBOR
plus 3.00%
D BBB- (sf) 37.10 14.25 Three/six-month EURIBOR
plus 4.25%
E BB- (sf) 23.40 10.00 Three/six-month EURIBOR
plus 7.00%
F† B- (sf) 16.50 7.00 Three/six-month
EURIBOR
plus 7.20%
Z NR 10.00 N/A N/A
Sub. Notes NR 43.00 N/A N/A
*The ratings assigned to the class A-1 Loan, A-2 Loan, A, B-1, and
B-2 notes address timely interest and ultimate principal payments.
The ratings assigned to the class C, D, E, and F notes address
ultimate interest and principal payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
†Class F is a delayed drawdown tranche, which is not issued at
closing.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
CARLYLE EURO 2024-1: S&P Assigns B- (sf) Rating to Class E Notes
----------------------------------------------------------------
S&P Global Ratings assigned credit ratings to the class A-1, A-2,
B, C, D, and E notes and class A-1 loan issued by Carlyle Euro CLO
2024-1 DAC. The issuer also issued unrated subordinated notes.
Under the transaction documents, the rated notes and loan will pay
quarterly interest unless a frequency switch event occurs.
Following this, the notes will permanently switch to semiannual
payments.
The portfolio's reinvestment period will end approximately 4.7
years after closing and the non-call period will end 1.5 years
after closing.
The ratings reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
-- The transaction's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio benchmarks
CURRENT
S&P Global Ratings' weighted-average rating factor 2,747.47
Default rate dispersion 478.18
Weighted-average life (years) 4.68
Weighted-average life (years) extended
to cover the length of the reinvestment period 4.68
Obligor diversity measure 115.57
Industry diversity measure 19.13
Regional diversity measure 1.29
Transaction key metrics
CURRENT
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.00
Actual 'AAA' weighted-average recovery (%) 36.67
Actual weighted-average spread (%) 4.21
S&P said, "Our ratings reflect our assessment of the collateral
portfolio's credit quality, which has a weighted-average rating of
'B'. The portfolio is well-diversified, primarily comprising
broadly syndicated speculative-grade senior secured term loans and
senior secured bonds. Therefore, we have conducted our credit and
cash flow analysis by applying our criteria for corporate cash flow
CDOs.
"In our cash flow analysis, we used the EUR400 million target par
amount, the actual weighted-average spread (4.21%), the covenanted
weighted-average coupon (5.50%), and the actual weighted-average
recovery rate at each rating level, calculated in line with our CLO
criteria. We applied various cash flow stress scenarios, using four
different default patterns, in conjunction with different interest
rate stress scenarios for each liability rating category.
"Our credit and cash flow analysis shows that the class A-2, B, C,
and D notes benefit from break-even default rate (BDR) and scenario
default rate cushions that we would typically consider to be in
line with higher ratings than those assigned. However, as the CLO
is still in its reinvestment phase, during which the transaction's
credit risk profile could deteriorate, we have capped our ratings
on these classes of notes. The class A-1 notes, A-1 loan, and E
notes can withstand stresses commensurate with the assigned
ratings.
"Until the end of the reinvestment period on Jan. 15, 2029, the
collateral manager may substitute assets in the portfolio for so
long as our CDO Monitor test is maintained or improved in relation
to the initial ratings on the notes. This test looks at the total
amount of losses that the transaction can sustain as established by
the initial cash flows for each rating, and compares that with the
default potential of the current portfolio plus par losses to date.
As a result, until the end of the reinvestment period, the
collateral manager may through trading deteriorate the
transaction's current risk profile, if the initial ratings are
maintained.
"Under our structured finance sovereign risk criteria, we consider
that the transaction's exposure to country risk is sufficiently
mitigated at the assigned rating levels.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"The transaction's legal structure is bankruptcy remote, in line
with our legal criteria."
The transaction is managed by Carlyle CLO Partners Manager LLC, a
Delaware limited liability company. It is an affiliate of The
Carlyle Group L.P. and a relying adviser of Carlyle Investment
Management L.L.C.
S&P said, "Following our analysis of the credit, cash flow,
counterparty, operational, and legal risks, we believe that our
assigned ratings are commensurate with the available credit
enhancement for the class A-1 to E notes and the A-1 loan.
"In addition to our standard analysis, to provide an indication of
how rising pressures among speculative-grade corporates could
affect our ratings on European CLO transactions, we have also
included the sensitivity of the ratings on the class A-1 to D notes
and A-1 loan based on four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class E notes."
Environmental, social, and governance
S&P regards the exposure to environmental, social, and governance
(ESG) credit factors in the transaction as being broadly in line
with its benchmark for the sector. Primarily due to the diversity
of the assets within CLOs, the exposure to environmental credit
factors is viewed as below average, social credit factors are below
average, and governance credit factors are average.
Ratings
AMOUNT
CLASS RATING* (MIL. EUR) INTEREST RATE§ SUB (%)
A-1 AAA (sf) 186.00 Three-month EURIBOR 38.00
plus 1.50%
A-1 loan AAA (sf) 62.00 Three-month EURIBOR 38.00
plus 1.50%
A-2 AA (sf) 44.00 Three-month EURIBOR 27.00
plus 2.30%
B A (sf) 23.00 Three-month EURIBOR 21.25
plus 3.00%
C BBB- (sf) 26.00 Three-month EURIBOR 14.75
plus 4.25%
D BB- (sf) 19.00 Three-month EURIBOR 10.00
plus 7.09%
E B- (sf) 12.00 Three-month EURIBOR 7.00
plus 8.54%
Sub Notes NR 39.05 N/A N/A
*The ratings assigned to the class A-1, A-2 notes and A-1 loan
address timely interest and ultimate principal payments. The
ratings assigned to the class B, C, D, and E notes address ultimate
interest and principal payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
FAIR OAKS V: S&P Assigns B- (sf) Rating to EUR10.50MM Cl. F Notes
-----------------------------------------------------------------
S&P Global Ratings assigned credit ratings to Fair Oaks Loan
Funding V DAC's class X to F European cash flow CLO notes. At
closing, the issuer also issued unrated class Z, M, and
subordinated notes.
The ratings reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior-secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
Portfolio benchmarks
CURRENT
S&P weighted-average rating factor 2,663.15
Default rate dispersion 594.61
Weighted-average life (years) extended
to cover the length of the reinvestment period 4.50
Obligor diversity measure 108.17
Industry diversity measure 21.72
Regional diversity measure 1.32
Transaction key metrics
CURRENT
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.00
Covenanted 'AAA' weighted-average recovery (%) 36.53
Actual weighted-average spread (net of floors; %) 4.00
Actual weighted-average coupon (%) 4.49
Asset priming obligations and uptier priming debt
Under the transaction documents, the issuer can purchase asset
priming (drop down) obligations and/or uptier priming debt to
address the risk where a distressed obligor could either move
collateral outside the existing creditors' covenant group or incur
new money debt senior to the existing creditors.
Rating rationale
S&P said, "The portfolio is well-diversified, primarily comprising
broadly syndicated speculative-grade senior secured term loans and
senior secured bonds. Therefore, we have conducted our credit and
cash flow analysis by applying our criteria for corporate cash flow
CDOs.
"In our cash flow analysis, we used the EUR350 million performing
pool balance, the covenanted weighted-average spread (3.80%), the
covenanted weighted-average coupon (4.30%), the covenant
weighted-average recovery rates at the 'AAA' level, and the target
weighted-average recovery rates for all other rating levels as
indicated by the collateral manager. We applied various cash flow
stress scenarios, using four different default patterns, in
conjunction with different interest rate stress scenarios for each
liability rating category.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-1, B-2, C, D, E, and F notes
could withstand stresses commensurate with higher ratings than
those we have assigned. However, as the CLO will be in its
reinvestment phase starting from closing, during which the
transaction's credit risk profile could deteriorate, we have capped
our ratings assigned to the notes.
"Under our structured finance sovereign risk criteria, we consider
that the transaction's exposure to country risk is sufficiently
mitigated at the assigned ratings.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"The transaction's legal structure is bankruptcy remote, in line
with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for each class
of notes.
"In addition to our standard analysis, to provide an indication of
how rising pressures among speculative-grade corporates could
affect our ratings on European CLO transactions, we have also
included the sensitivity of the ratings on the class X to E notes
to four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F notes."
Environmental, social, and governance factors
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit assets from being related
to certain activities, including but not limited to, the following:
non-certified palm oil production, mining or electrification of
thermal coal, pornography or prostitution."
The following prohibitions also apply to assets that:
-- Draw more than 5% of revenue from tobacco,
-- Draw more than 5% of revenue from production of oil sands,
-- Draw more than 5% of revenue from weapons firearms,
-- Draw more than 25% of revenue from hazardous chemicals, and
-- Draw more than 25% of revenue from payday lending.
Accordingly, since the exclusion of assets from these industries
does not result in material differences between the transaction and
S&P's ESG benchmark for the sector, no specific adjustments have
been made in its rating analysis to account for any ESG-related
risks or opportunities.
Ratings list
AMOUNT INTEREST CREDIT
CLASS RATING* (MIL. EUR) RATE (%)§ ENHANCEMENT
(%)
X AAA (sf) 2.00 3mE + 0.50 N/A
A AAA (sf) 217.00 3mE + 1.48 38.00
B-1 AA (sf) 26.10 3mE + 2.15 27.69
B-2 AA (sf) 10.00 5.75 27.69
C A (sf) 22.10 3mE + 2.70 21.37
D BBB- (sf) 24.90 3mE + 4.00 14.26
E BB- (sf) 15.40 3mE + 6.69 9.86
F B- (sf) 10.50 3mE + 8.39 6.86
Z NR 4.00 N/A N/A
Sub NR 28.60 N/A N/A
M NR 1.00 N/A N/A
*The ratings assigned to the class X, A, B-1, and B-2 notes address
timely interest and ultimate principal payments. The ratings
assigned to the class C to F notes address ultimate interest and
principal payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
NR--Not rated.
N/A--Not applicable.
3mE--Three-month Euro Interbank Offered Rate.
HARVEST CLO XVIII: S&P Affirms 'B- (sf)' Rating on Class F Notes
----------------------------------------------------------------
S&P Global Ratings raised its credit ratings on Harvest CLO XVIII
DAC's class B notes to 'AAA (sf)' from 'AA (sf)', class C notes to
'AA- (sf)' from 'A (sf)', and class D notes to 'BBB+ (sf)' from
'BBB (sf)'. At the same time, S&P affirmed its 'AAA (sf)' ratings
on the class A-1 and A-2 notes, 'BB- (sf)' rating on the class E
notes, and 'B- (sf)' rating on the class F notes.
The rating actions follow the application of its global corporate
CLO criteria and its credit and cash flow analysis of the
transaction based on the end-January 2024 payment report.
Since the closing date in January 2018:
-- The weighted-average rating of the portfolio remains at 'B'.
-- The portfolio has become more diversified, as the number of
performing obligors has increased to 141 from 124.
-- The portfolio's weighted-average life has decreased to 3.28
years from 6.26 years.
-- The percentage of 'CCC' rated assets has increased to 6.02%
from 2.50% of the performing balance.
-- Following the partial amortization of the senior notes (class
A-1 and A-2), the credit enhancement has increased for all classes
of notes compared with S&P's previous review.
Credit enhancement
CURRENT AMOUNT
CLASS (MIL. EUR) CURRENT (%) AT CLOSING IN 2018 (%)
A-1 150.97 48.20 43.25
A-2 22.99 48.20 43.25
B 56.50 31.37 29.13
C 33.50 21.40 20.75
D 22.00 14.85 15.25
E 21.00 8.59 10.00
F 10.50 5.46 7.38
Sub Notes 39.20 N/A N/A
N/A--Not applicable.
The scenario default rates (SDRs) have decreased for all rating
scenarios following a reduction in the weighted-average life since
the closing date (3.28 years from 6.26 years).
Portfolio benchmarks
AT CLOSING
CURRENT IN 2018
SPWARF 2,831.24 2,663.38
Default rate dispersion 634.38 645.20
Weighted-average life (years) 3.28 6.26
Obligor diversity measure 100.13 103.34
Industry diversity measure 22.65 20.54
Regional diversity measure 1.19 1.46
SPWARF--S&P Global Ratings' weighted-average rating factor. All
figures presented in the table do not include defaulted assets.
On the cash flow side:
-- The reinvestment period for the transaction ended in April
2022.
-- The class A-1 and A-2 notes have deleveraged by a combined
EUR53.0 million since closing.
-- No class of notes is currently deferring interest.
-- All coverage tests are passing as of the end-January 2024
payment report.
Transaction key metrics
AT CLOSING
CURRENT IN 2018
Total collateral amount (mil. EUR)* 335.81 400.00
Defaulted assets (mil. EUR) 7.15 0.00
Number of performing obligors 141 124
Portfolio weighted-average rating B B
'AAA' SDR (%) 56.33 68.61
'AAA' WARR (%) 37.17 35.13
*Performing assets plus cash and expected recoveries on defaulted
assets.
SDR--scenario default rate.
WARR--Weighted-average recovery rate.
S&P said, "In our view, the portfolio is diversified across
obligors, industries, and asset characteristics. As the CLO is in
its amortization phase, and the portfolio could become more
concentrated, we have performed an additional scenario analysis by
applying a spread and recovery compression analysis. The rating
actions consider this additional scenario analysis.
"Based on the improved SDRs (mainly driven by the shorter
weighted-average life) and higher credit enhancement available to
the notes (due to the deleveraging of the notes), we have raised
our ratings on the class B, C, and D notes. At the same time, we
have affirmed our ratings on the class A-1, A-2, E, and F notes.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class C, D, and E notes could withstand
stresses commensurate with higher rating levels than those
assigned.
"The transaction has continued to amortize since the end of the
reinvestment period in April 2022. However, we have considered that
the manager may still reinvest unscheduled redemption proceeds and
sale proceeds from credit-impaired assets. Such reinvestments (as
opposed to repayment of the liabilities) may therefore prolong the
note repayment profile for the most senior class of notes.
"The rating actions consider the level of cushion between our
break-even default rate (BDR) and SDR for these notes at their
passing rating levels, as well as the current macroeconomic
conditions and these classes of notes' relative seniority and not
just driven by the model outcome.
"Considering all of these factors, we raised our ratings on the
class B and C notes by two notches, and the class D notes by one
notch.
"Our ratings on the class A-1, A-2 , E, and F notes are
commensurate with the available credit enhancement. We have
therefore affirmed our ratings on these classes of notes.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria.
"Counterparty, operational, and legal risks are adequately
mitigated in line with our criteria."
=========
I T A L Y
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MILTONIA MORTGAGE: Moody's Assigns B2 Rating to EUR51.7MM F Notes
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Moody's Ratings has assigned definitive long-term credit ratings to
Notes issued by Miltonia Mortgage Finance S.r.l.:
EUR3650.4M A Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned Aa3 (sf)
EUR128.3M B Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned A3 (sf)
EUR111.7M C Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned Baa3 (sf)
EUR62.1M D Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned Ba1 (sf)
EUR41.4M E Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned Ba3 (sf)
EUR51.7M F Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned B2 (sf)
EUR62.1M G Mortgage Backed Floating Rate Notes due April 2062,
Definitive Rating Assigned Caa2 (sf)
Moody's has not assigned Ratings to EUR115.0M Class R Notes and
EUR31.0M Class Z Notes due April 2062.
RATINGS RATIONALE
The Notes are backed by a static portfolio of Italian first lien
residential mortgage loans: 88.7% of the loans were originated by
Barclays Bank PLC (A1/P-1 Bank Deposits; A1(cr)/P-1(cr)) acting
through its Italian branch, "Barclays Milan"; 6.4% were originated
by Banca Woolwich SpA (NR) which was merged with Barclays Bank PLC
in April 2004; 4.9% were originated by Macquarie Bank Limited
(Aa2/P-1 Bank Deposits; Aa2(cr)/P-1(cr)) and subsequently acquired
by Barclays Milan.
The portfolio of assets amount to approximately EUR4,139M as of May
31, 2023 pool cut-off date. At closing, the liquidity reserve fund
will be equal to 0.50% of the Classes A and B Notes while general
reserve fund will be equal to 2.80% of the Classes A to G Notes
minus liquidity reserve fund required amount. Total credit
enhancement for the Class A Notes will be 14.58%.
The ratings are primarily based on the credit quality of the
portfolio, the structural features of the transaction and its legal
integrity.
According to Moody's, the transaction benefits from various credit
strengths such as the high seasoning of the collateral and
historical data provided, the low level of LTV, the low amount of
loans in arrears, the level of credit enhancement provided for each
tranche, a liquidity and a general reserve fund. The liquidity
reserve fund will be replenished after payment of interest on Class
A and B Notes and can be used to cover Class A Notes interest and
PDL, Class B interest, senior fees and swap.
However, Moody's notes that the transaction features some credit
weaknesses, such as the interest rate switch optionality and the
low excess spread at closing. Around 64% of collateral pool is made
by floating rate loans with the optionality to switch to a fixed
rate; although historical data show that in the last 7 years the
optionality has been exercised by a very limited percentage of
borrowers (approx. 1% of the pool), the likelihood of this option
being exercised can change overtime. Various mitigants have been
included in the transaction to address this, such as an interest
rate balance guaranteed swap which reduces the risk of interest
rate mismatch, mainly for fixed for life and fixed with optionality
loans.
Moody's determined the portfolio lifetime expected loss of 1.5% and
MILAN Stressed Loss of 6.0% related to borrower receivables. The
expected loss captures Moody's expectations of performance
considering the current economic outlook, while the MILAN Stressed
Loss captures the loss Moody's expect the portfolio to suffer in
the event of a severe recession scenario. Portfolio expected loss
and MILAN Stressed Loss are parameters used by Moody's to calibrate
its lognormal portfolio loss distribution curve and to associate a
probability with each potential future loss scenario in the ABSROM
cash flow model to rate RMBS.
Portfolio expected loss of 1.5%: This is lower than Italian
residential mortgage sector average and is based on Moody's
assessment of the lifetime loss expectation for the pool taking
into account: (i) the portfolio characteristics, including WA LTV
of 50.8% ; (ii) the current macroeconomic environment in Italy and
the impact of future interest rate rises on the performance of the
mortgage loans; and (iii) benchmarking with similar Italian RMBS.
MILAN Stressed Loss of 6.0%: This is lower than Italian residential
mortgage sector average and follows Moody's assessment of the
loan-by-loan information taking into account the following key
drivers: (i) the WA LTV of 50.8%; (ii) the originator and servicer
assessment; (iv) the wide historical performance data covering
several economic cycles; and (v) benchmarking with similar Italian
RMBS.
The principal methodology used in these ratings was "Residential
Mortgage-Backed Securitizations methodology" published in October
2023.
The analysis undertaken by Moody's at the initial assignment of
ratings for RMBS securities may focus on aspects that become less
relevant or typically remain unchanged during the surveillance
stage.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may cause an upgrade of the ratings of the notes
include significantly better than expected performance of the pool
together with an increase in credit enhancement of Notes.
Factors that would lead to a downgrade of the ratings include: (i)
an increase in the level of arrears resulting in a higher level of
losses than forecast; (ii) increased counterparty risk leading to
potential operational risk of servicing or cash management
interruptions; or (iii) economic conditions being worse than
forecast resulting in higher arrears and losses.
===================
L U X E M B O U R G
===================
ALTICE INTERNATIONAL: S&P Lowers LT ICR to 'B-', Outlook Negative
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S&P Global Ratings lowered to 'B-' from 'B' its long-term issuer
credit rating on telecommunications operator Altice International
S.a.r.l. S&P also lowered to 'B-' from 'B' its issue rating on
Altice Financing S.A.'s senior secured debt and to 'CCC' from
'CCC+' its issue rating on Altice Finco S.A.'s senior unsecured
debt.
The negative outlook reflects the risk that the long-term
sustainability of Altice International's capital structure could
appear as materially weaker within a year, absent any significant
turnaround in the company's FOCF generation or due to negative
market sentiment.
S&P said, "In 2023, Altice International underperformed our base
case as operations are mainly affected by the Israel-Hamas war,
currency depreciations, and macroeconomic pressure--the effect of
these will most likely continue throughout 2024. Reported revenue
underperformed our previous base case in 2023 by 6.7% and EBITDA
underperformed our previous base case by 5.3%." More specifically
underperformance resulted from:
-- Residential service revenue in Israel declining by 12.6% year
on year in 2023. The decline was triggered by the ongoing
competition in the fixed market, a partial freeze of subscription
fees for fixed services for some of the Israeli population evicted
in the south and in the north of the country, and declining prepaid
revenue and roaming as less customers are travelling abroad and
less visitors are coming to Israel.
-- The depreciation of the Israeli shekel and the Dominican peso
compared to the euro.
-- Ongoing macroeconomic pressure affecting the advertising market
and consequently the performance of Tead.
-- This was only partly offset by slightly stronger-than-expected
performance in Portugal spurred by continued fixed and mobile
subscriber growth, stronger adoption of high-value convergent
packages, and migration from very high-speed digital subscriber
lines (VDSL) to fiber-to-the-home (FTTH).
S&P said, "We forecast mid-single digit reported revenue and EBITDA
growth in 2024 supported by sound momentum in Portugal and Teads
returning to growth upon the easing of macroeconomic constrains.
However, this is partly offset by the effect of the war on the
company's Israeli operations and further depreciation of the
Israeli shekel and Dominican peso compared with the euro.
"We therefore expect leverage will remain elevated longer than
previously expected, and we calculate negative reported FOCF after
leases over 2023-2025.As of end-2023, Altice International's S&P
Global Ratings-adjusted debt to EBITDA was 7.7x, deteriorating from
7.4x in 2022. This was spurred by weaker-than-forecast reported
EBITDA, stronger performance at Fastfiber (we deconsolidate 49.99%
of revenues, EBITDA, and cash flows), and increasing reported gross
and net debt since 2020. We expect reported revenue and EBITDA
growth in 2024 will result in an improved adjusted leverage of
about 7.0x in 2024, however, we think the metric will stay at or
above 7.0x for longer than previously expected. The company
operates within its leverage target of reported net debt to EBITDA
of 4.0x-4.5x. We think any excess EBITDA growth and FOCF
improvement beyond the company's target will likely be used to
benefit the shareholder or fund projects within or outside Altice
International's perimeter.
"In 2023, we calculate the FOCF deficit intensified to about EUR100
million, from EUR4 million in 2022, hampered by
weaker-than-forecast reported EBITDA, higher interest expenses on
debt and debt-like items, and fees related to the issuance of a new
term loan--offsetting slightly declining capital expenditure
(capex). We calculate negative FOCF after leases of EUR50
million-EUR80 million in 2024, spurred by improving reported EBITDA
and reducing capex that likely will not offset growing cash
interests.
"We think Altice International's capital structure remains
sustainable in the short term; however, EBITDA cash interest cover
is pressured by deteriorating cost of refinancing conditions.
Altice International proactively monitors its debt stock, but
adjusted EBITDA cash interest cover is dropping below 3.0x in
2024."
On Oct. 2, 2023, Altice Financing raised a EUR800 million term loan
due in October 2027. The company used part of the proceeds to
partially repay the RCF and transferred EUR600 million of cash to a
bankruptcy-remote segregated escrow account. Proceeds from the
escrow account will be released only to redeem or repurchase the
existing EUR600 million 2025 senior secured notes before or upon
maturity. On Feb. 27, 2024, Altice Financing also raised $375
million senior secured notes through a private placement. With
these transactions, Altice International has improved its liquidity
profile in the short term because it has increased availability
under its RCF and secured proceeds to face its 2025 maturity.
However, new debt has been raised at a higher margin (the 2.250%
bond and EURIBOR +3% RCF are substituted by a EURIBOR +5% term loan
and a 9.625% private placement). This, combined with growing
reference rate for floating debt and weaker-than-forecast
performance, translates into adjusted EBITDA cash interest cover of
3.1x in 2023 and 2.5x-3.0x from 2024.
It could be more difficult for Altice International to refinance
its debt overtime. Altice International's next maturity wall is in
2027. It is unclear whether the company will be able to repay its
debt at par when it comes due in the long term, particularly with
interest rates elevated and uncertainty surrounding earnings and
reported FOCF after leases improvement. The company's cash flow
benefits from an average interest rate of about 5%. S&P envisages
the company's cost of refinancing conditions will likely
deteriorate, increasing the pressure on the EBITDA cash interest
cover and reported FOCF after leases absent any significant
turnaround. Therefore, the risk that it would assess the capital
structure as unsustainable in the long term has increased.
Although Altice International complies with its internal leverage
target, our ratings reflect governance concerns and the
prioritization of shareholder interest. S&P classifies management
and governance as negative. This is based on the track record and
its view of governance as a long-term credit risk, including at
other Altice entities and particularly Altice France--which shares
the same shareholder as Altice International. S&P thinks events at
Altice France demonstrate common shareholder ability and
willingness to prioritize shareholder interests over those of
creditors and deleveraging. At Altice International's company
level, it started large distributions in 2023--which resulted in no
headroom within its maximum leverage tolerance of 4.5x and a
growing absolute debt burden.
At this stage, there is no evidence that Altice International could
adopt the same coercive approach to lenders as Altice France and
S&P rates both companies independently from one another as they
operate on their own, they do not comingle funds, and have their
own capital structure and debt package. That said, several assets
within the company--including PT Portugal--are up for sale and debt
documentation provides flexibility to designate assets as
unrestricted--which were so far restricted.
The negative outlook reflects the risk that the long-term
sustainability of Altice International's capital structure could
appear as materially weaker within a year, absent any significant
turnaround in the company's FOCF generation or due to negative
market sentiment.
S&P could lower the ratings if:
-- Adjusted debt to EBITDA does not improve from its current
level, with reported FOCF after leases remaining sustainably
negative;
-- Adjusted EBITDA cash interest cover sustainably declines to
less than 2.0x; or
-- The refinancing of the next heavy maturities seems increasingly
challenging or expensive and S&P's view of the long-term
sustainability of the capital structure becomes more negative.
This may happen if Altice International's cost of refinancing
condition deteriorates or if revenue and EBITDA underperformed
compared with S&P's current forecasts on increasing competitive
pressure, unforeseen knock-on effects from the Israel-Hamas war on
the company's operations, unforeseen cost inflation, or
significantly negative market sentiment. It could also result from
the company spending more cash than currently forecast on
distributions, or investment in infrastructure.
S&P could also lower its rating if Altice International adopted a
more aggressive financial policy, translating to the company
operating outside its 4.0x-4.5x reported net leverage target, or if
S&P thinks that the risk of an exchange offer or restructuring that
we would assess as distressed has increased.
S&P could stabilize the ratings if:
-- Reported FOCF after leases turn and stay positive,
accommodating future refinancing fees;
-- Adjusted EBITDA cash interest cover stays above 2.0x;
-- Altice International materially and sustainably reduces
leverage below 7.0x, while operating within its reported leverage
target, including a headroom; and
-- The long-term sustainability of the capital structure is no
longer a concern.
This may happen if Altice International cuts its gross debt burden,
contains its interest burden while refinancing, and overperforms
our current revenue and EBITDA forecasts.
Altice International is owned by controlling shareholder Patrick
Drahi, who indirectly owns 91.33% of the share capital of the
company. Drahi has a track record of engaging in activity that
prioritizes shareholder interest over those of creditors. Altice
France's coercive approach to lenders reinforces our long-term view
regarding Altice France and Altice International's governance
because it demonstrates the ability and willingness of the common
shareholder to prioritize its interest over those of creditors and
deleveraging. This is in line with Altice France's decision in 2021
to designate SFR towers as an unrestricted subsidiary and to
upstream asset sale proceeds to repay the debt incurred to take the
company private in 2020, rather than reduce Altice France debt.
While S&P acknowledges Altice International operates within but at
the maximum of its leverage target, the company pays large dividend
and is flexible in its debt documentation to designate restricted
subsidiaries as unrestricted.
MANGROVE LUXCO: S&P Ups Sr. Sec. Notes Rating to 'B-', Outlook Neg.
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S&P Global Ratings raised its ratings on Luxembourg-based, global
heat exchanger maker Mangrove Luxco III and its senior secured
notes to 'B-' from 'CCC+', and its rating on the company's super
senior revolving credit facility (RCF) and guarantee facility to
'B+' from 'B'; the recovery ratings on the debt remain at '4' and
'1' respectively.
The negative outlook reflects primarily that the group's upcoming
debt maturities fall due within the next 14 to 18 months, and a
delay in addressing them could lead to a downgrade.
End-market demand remains healthy, fueling top-line expansion at
least over the next 12 to 18 months. Over the past two years,
Mangrove has exhibited significant improvement in its performance.
The company demonstrated strong growth with a revenue increase of
15.6% in 2022 and 25.1% in 2023 to EUR1.3 billion. The S&P Global
Ratings-adjusted EBITDA margin also improved from 5.8% in 2022 to
8.6% in 2023, with earnings at EUR116.5 million. This was fueled by
strong demand across Mangrove's key end markets, especially in
those related to data centers, as well as to oil and gas,
chemicals, and energy. Transportation, in particular, marine
industries, also recorded good growth. S&P's also seen positive
dynamics across most of the geographies, with business in the U.S.
and Latin America showing most of the pickup. S&P anticipates this
momentum will continue in 2024, with revenue increasing by 17%-22%
to approximately EUR1.6 billion in 2024, surpassing previous
forecasts. A further uptick in revenue by 5%-10% is projected for
2025, supported by record high order intake of EUR1.7 billion in
2023.
Revenue expansion, product mix effects, favorable pricing dynamics,
and restructuring efforts support the improvement of profitability
and cash flow generation. S&P Global Ratings-adjusted EBITDA
margins strengthened to about 8.6% for 2023 from 5.8% in 2022, and
S&P anticipates it will continue to improve to 10.5%-11.0% in 2024.
Profitability will be supported by various factors, including
increased volumes, and a favorable product mix that allows Mangrove
to achieve better prices due to high demand. S&P said, "We also
believe the company's restructuring initiatives will benefit future
profitability development. As a result, and supported by
significant working capital inflows from inventory management,
Mangrove was able to post EUR124 million of FOCF in 2023. For 2024,
we anticipate positive FOCF of EUR30 million-EUR40 million, notably
lower than in 2023, since we expect additional working capital
requirements to fund revenue growth and no further release of cash
from inventory management."
Strong credit metrics and positive FOCF over the next 12-18 months
should bring leverage to a sustainable level. S&P Global
Ratings-adjusted debt to EBITDA dropped to 4.1x in 2023 from 8.7x
in 2022 and is anticipated to fall to less than 3x in 2024, given
the forecast EBITDA growth and assuming no change in debt levels.
Furthermore, FFO cash interest coverage ratios improved
significantly to 2.6x in 2023 from 1.3x and are expected to climb
comfortably above 3.0x in 2024. The positive development in credit
metrics has been supported by the full repayment of drawings on the
EUR65 million RCF in the second half of 2023, as well as
significant improvement in performance.
S&P said, "Our assessment incorporates our assumption that Mangrove
will be able to address its upcoming debt maturities in 2025.In the
first quarter of 2024, the group extended the maturities of its
EUR65 million RCF and EUR190 million senior guarantee facility to
June 2025 from October 2024. The guarantee facility, which is a
requirement in the industry, is essential for Mangrove's
operations. Without this guarantee, the company would require cash
collateral to be able to bid on projects. Its EUR356 million senior
secured notes will mature in October 2025. If not addressed in
time, our current ratings would be under pressure. However, we
understand that management has already started the process to
refinance its capital structure and will be able to do this in a
timely manner. At this time, given the substantial improvement in
operating performance and expected low leverage, we see a low
likelihood of a distressed debt exchange."
The negative outlook reflects primarily that the group's upcoming
debt maturities fall due within the next 14 to 18 months, and the
delay in addressing then could lead to a downgrade.
S&P said, "We could lower the rating if the group does not address
its 2025 debt maturities in a timely manner. Additionally,
inability to comply with financial covenants would likely trigger a
downgrade.
"We could also lower the rating if Mangrove materially
underperforms our base-case expectations, leading to much lower
profitability than expected and, ultimately, weaker cash
generation. However, we view this scenario as less likely.
"We could raise the rating if the group sustains the improvements
in its profitability and operating performance, translating into
sustained positive FOCF and FFO cash interest coverage higher than
1.5x. We estimate that the group would need to generate S&P Global
Ratings-adjusted EBITDA margins sustainably higher than 8.0% to
achieve positive FOCF. An upgrade would also require timely
refinancing or repayment of upcoming debt maturities and we believe
a distressed exchange is unlikely."
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S P A I N
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PERALTA INVERSIONES: Moody's Assigns First Time 'B2' CFR
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Moody's Ratings has assigned a first-time B2 long-term corporate
family rating and B2-PD probability of default rating to Peralta
Inversiones Globales S.L., a new entity created for the acquisition
of Monbake Grupo Empresarial, S.A.U. (Monbake or the company), one
of the leading producers of frozen bread and bakery products in
Spain. Concurrently, Moody's has assigned B2 ratings to the
proposed new EUR520 million senior secured term loan B maturing in
2031 and to the EUR100 million senior secured revolving credit
facility (RCF) maturing in 2030, both to be borrowed by Peralta
Inversiones Globales S.L. The assigned ratings assume successful
completion of the planned transactions and are subject to Moody's
receipt and review of final documentation. The outlook on all
ratings is stable.
Proceeds from the proposed term loan, along with a new common
equity contribution by CVC Capital Partners will fund a leveraged
buyout ("LBO") of Monbake, including repayment of the company's
existing debt and transaction related fees and expenses. In
addition, part of the proceeds raised will be used to fund the
bolt-on acquisition of a Spanish manufacturer in the frozen pizza
space. The CVC buyout transaction is pending regulatory approvals
and is expected to close in the early part of Q3 2024 (calendar
year).
RATINGS RATIONALE
The B2 CFR assigned to Monbake reflects (1) the company's
significant geographic and product concentration with 93% of its
revenues generated in Spain and 62% from the sale of frozen bread
(pro forma for the target acquisition); (2) the maturity of the
overall bread and bakery (B&B) market in Spain, although Moody's
recognizes the growth prospective of frozen segment; (3) the
company's moderate size compared to its broader rated food peers
and largest customers, with around EUR460 million of combined
revenues in 2023 (pro forma for the acquisition); (4) the company's
high leverage, as measured by Moody's adjusted debt/EBITDA,
estimated to remain at around 5.5x in the next 12 to 18 months
following the transaction; and (5) some execution risks related to
the integration of the target acquisition.
The B2 CFR also factors in (1) the leading position and meaningful
scale of the company within the narrow frozen B&B category, with a
17% share in the Spanish frozen B&B market in value terms; (2) the
limited cyclicality of the B&B market, which has relatively low
correlation with the economic cycle; (3) the company's solid track
record of revenue growth, supported by the increasing penetration
of frozen products and ongoing product innovation; and (4) its good
liquidity.
The current rating ponders the strong operating performance in
2023. While Monbake's revenue increased by 11.3% in 2023 (12.5%
price and -1.1% volume), its Moody's adjusted EBITDA increased by
41%, compared to prior year. This trend has continued through Q1
2024. The company's operating performance was supported by
successful inflation pass-through and resilient demand, as well as
a better product mix driven by a focus towards higher-margin
categories and channels, specially traditional bakeries and shops
(around 60% of revenue), which while providing a diversified
customer base, also allows for better profitability and higher
negotiation power than on retailers.
Considering the revised capital structure and the bolt-on
acquisition that the company aims to finalize in the near term, the
rating agency anticipates debt-to-EBITDA ratio (on a Moody's
adjusted basis) to remain high at around 5.5x in the next 12 to 18
months following the transaction, positioning the company at the
weak end of the rating category. Although there are some risks and
uncertainty regarding the ability to retain current profit margins,
Moody's recognizes that the company's significant exposure to the
traditional channel and consequently, a diverse customer base with
comparatively lesser bargaining power than modern retailers,
enhances its capacity to maintain such margins in the future.
Moody's anticipates free cash flow generation to be strained both
in 2024 and 2025, and improve only thereafter. Although the
company's cash flow generation ability remains good, supported by
its resilient performance and limited working capital requirements,
and despite higher interest expenses in the new structure, most of
the cash flow will be reinvested into project based capex to
support capacity expansions needed to capture market share as
demand remains strong against current supply constraints,
temporarily weighting on free cash flow generation. The rating
agency also acknowledges the fact that the company will preserve
its flexibility in adapting and adjusting capital spending in case
of need to preserve its cash flow generation.
ESG CONSIDERATIONS
ESG and specifically governance is a key driver of the rating
action. As a consequence, the rating is lower than it would have
been if ESG risk exposures did not exist to reflect the weight
placed on Monbake's financial policy and concentrated ownership
under private equity firm CVC Capital Partners which, as is often
the case in private equity sponsored deals, has a high tolerance
for leverage, lacks an independent Board of Directors, and a
comparatively less transparency than that of publicly listed
companies. Exposure to environmental and social risks exist but
have less influence on the rating.
LIQUIDITY
Moody's expects Monbake to maintain good liquidity over the next
12-18 months following the transaction, supported by an estimated
post-closing cash balance of EUR30 million and a EUR100 million
committed RCF. The RCF is expected to be undrawn at closing, with
ample headroom under the springing covenant of senior secured net
leverage not exceeding 9x, tested quarterly when the facility is
more than 40% drawn.
In addition, Moody's expects the peak in capital spending needed to
secure additional capacity, if executed, to result in a weak
Moody's-adjusted FCF generation in both 2024 and 2025, with
positive improvements projected only after this period.
Assuming no RCF utilisation, the company will have no material debt
maturities until 2031, when its term loan is due.
COVENANTS
Moody's has reviewed the marketing draft terms for the new credit
facilities. Notable terms include the following:
Guarantor coverage will be at least 80% of consolidated EBITDA
(determined in accordance with the agreement), which at the
company's option may be calculated excluding entities and/or
companies not in a security jurisdiction. Guarantees and security
will only be granted in Spain and other jurisdictions to be agreed.
Security will be limited to security over key shares, bank accounts
and structural receivables.
Unlimited pari passu debt is permitted up to either (1) 5.25x
senior secured net leverage ratio (SNLR) or (2) the leverage ratio
in effect prior to such transaction. Unsecured debt is permitted
up to a total net leverage ratio (TNLR) of 7.5x. Any such debt may
be made available as incremental facilities.
Any Restricted payment is permitted if SNLR is 4.5x or lower, and
repayments of subordinated debt are permitted if SNLR is 5.0x or
lower. Any investment may be made if (a) SNLR is 5.25x or lower, or
TNLR is 7.5x or lower, or the fixed charge coverage ratio is
greater than 1.75x, or (b) the relevant ratio in effect prior to
such transaction is better or if funded from the available amount.
Asset sale proceeds are only required to be applied in full where
net leverage is 5.0x or greater.
Adjustments to consolidated EBITDA include run-rate cost savings
and synergies, capped at 25% of consolidated EBITDA with a 24
months realisation period.
The proposed terms, and the final terms may be materially
different.
STRUCTURAL CONSIDERATIONS
The B2 ratings assigned to the EUR520 million senior secured term
loan and the EUR100 million revolving credit facility (RCF) are in
line with the CFR, reflecting the fact that these two instruments
will rank pari passu and will represent substantially all of the
company's financial debt at closing of the transaction. These
facilities are guaranteed by material subsidiaries representing at
least 80% of consolidated EBITDA and will benefit from pledges over
the shares of the borrower, bank accounts and intragroup
receivables, which Moody's considers as weak.
The B2-PD PDR assigned to Monbake reflects Moody's assumption of a
50% family recovery rate, given the weak security package and the
limited set of financial covenants.
Moody's understands that the equity contribution provided by funds
managed by CVC Capital Partners and entering the restricted group,
will be in the form of common equity.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's expectations that the company's
earnings will remain resilient and anticipates a Moody's-adjusted
(gross) Debt / EBITDA ratio hovering around 5.5x over time thanks
to continue organic grow, supported by increasing demand for frozen
bread and the company's current competitive positioning. The stable
outlook also assumes a smooth integration of the target bolt-on
acquisition and reflects Moody's expectations that the company will
maintain overall good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Monbake's modest size and concentration of the business limit
upwards pressure on the ratings. Potential upward pressure could
materialize over time if the company improves its scale and product
and geographic diversification, together with continued strong
operating performance and positive free cash flow generation, while
maintaining a prudent financial policy. Quantitatively, this would
include the company's Moody's adjusted debt to EBITDA ratio to stay
sustainably well below 4.5x, while its Moody's-adjusted EBITA to
interest ratio increases above 2.25x. In addition, an upgrade would
require the maintenance of a strong liquidity profile.
Downward rating pressure could develop if the company's operating
performance weakens, such that the company is unable to sustainably
maintain a Moody's-adjusted gross debt to EBITDA ratio below 5.5x,
while its Moody's-adjusted EBITA to interest ratio drops below
1.5x. In addition, the ratings could be lowered if financial policy
becomes more aggressive, if the company's liquidity profile
deteriorates.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
COMPANY PROFILE
Monbake, headquartered in Mutilva (Navarre), is specialised in the
production and distribution of frozen bread, bakery, pastry
products and savory snacks. Pro forma for the bolt-on acquisition,
the company's main product categories are bread (62% of revenue),
pastries (22% of revenue), pizza (8% of revenues) and cakes (4% of
revenue). It operates primarily in Spain (around 93% of revenue)
and exports to 30 countries (around 7% of revenue). The company's
key distribution channels include bakeries, retailers, hotels,
restaurants and cafes ("HoReCa"), a network of owned and franchised
stores and exports. In 2023, the company reported revenue of EUR460
million and generated Moody's-adjusted EBITDA of EUR110 million
(pro forma for the acquisition). The group is controlled by funds
managed by the private equity firm CVC Capital Partners.
PERALTA INVERSIONES: S&P Rates New Senior Secured Term Loan B 'B'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' ratings to Peralta Inversiones
Globales S.L. and its proposed senior secured term loan B (TLB); it
also assigned a recovery rating of '3' to the debt, reflecting its
expectation of meaningful recovery (50%-70%; rounded estimate 55%)
in the event of default.
The stable outlook reflects S&P's view that Monbake should be able
to retain its leading position in Spain's resilient frozen bread
and bakery industry, yielding slightly stronger credit metrics by
2025, with positive FOCF that can fund planned expansionary
investments.
In March 2024, funds advised by private equity firm CVC Capital
agreed to acquire Monbake, a Spain-based frozen bread and bakery
manufacturer that generated EUR420 million of revenue in 2023.
The transaction is expected to close mid-July 2024, and the new
capital structure includes a proposed EUR520 million term loan B
(TLB) to be raised by holding company Peralta Inversiones Globales
S.L. to fund the transaction and a bolt-on acquisition; Monbake
will also have a new EUR100 undrawn committed revolving credit
facility (RCF).
The rating primarily reflects Monbake's likely highly leveraged
capital structure following the takeover from financial sponsor
CVC. Under the proposed capital structure, the group will operate
with a EUR100 million long-term RCF, undrawn at closing, and a
EUR520 million long-term TLB. S&P said, "We understand the proceeds
will be used the repay the existing EUR275 million TLB, fund the
acquisition of Moon (a pizza manufacturer), and keep EUR30 million
in cash. For 2024 and 2025, assuming a resilient operating
performance, we see Monbake generating positive FOCF of about EUR15
million annually. This is despite large capex of EUR35
million-EUR50 million annually to expand manufacturing capacity as
the company looks to capture organic growth opportunities in
Spain's frozen bread and bakery industry. We also believe Monbake
can maintain stable credit metrics, S&P Global Ratings-adjusted
debt to EBITDA at about 5.5x and FFO cash interest coverage at
2.4x-2.9x. As customary for LBO transactions, we do not net cash
against debt. The long-dated debt maturities and ample undrawn
committed RCF imply that the group is adequately funded for its
business needs and faces no near-term refinancing risks. That said,
we expect the group to bear sizeable interest costs due to the
large amount of debt in the capital structure, though we understand
the group will seek to prudently mitigate interest-rate risk in the
future."
S&P said, "We forecast adjusted EBITDA to increase to about EUR100
million in 2024 and to EUR110 million in 2025, fueled by organic
revenue growth and acquisitions. We see flat organic revenue in
2024 as product mix improvements and slightly increasing volumes
are offset by negative pricing effects. This assumes selected price
decreases, notably with big retailers, based on the observed
normalization trends for the cost of key raw materials, mainly
flour, butter, and margarine. On the other hand, recently added
capacity to produce pastries, which exhibit higher profitability
than bread--should favor product mix improvements and some volume
growth. For 2025, we expect low single-digit revenue growth as
pricing stabilizes while the company continues to benefit from
higher pastry sales and further penetration of the traditional
channel, supported by Monbake's strong commercial capabilities.
Including the contribution from acquisitions--Moon in 2024 and an
additional bolt-on we assume for 2025--total revenue growth should
reach about 10% in 2024 and about 7% in 2025. We see limited
execution risks from the Moon acquisition, given Moon's already
well-invested manufacturing facility, as shown by its
higher-than-average industry margins, and expected synergies,
mainly from cross-selling initiatives. The S&P Global
Ratings-adjusted EBITDA margin is expected to decline by about 100
basis points (bps) in 2024, mainly due to the expiration of a
beneficial energy purchase price agreement in 2023, more than
offsetting easing raw material costs. For 2025, we see a 50 bps
margin uplift coming from the ramp-up of the Moon acquisition,
normalizing input costs, and product and channel mix
improvements."
Monbake's strong penetration of the traditional channel in Spain
and positive industry dynamics help offset the company's geographic
concentration and relatively limited scale. Within Spain's frozen
bread and bakery industry, Monbake focuses on the traditional
channel--selling to small bakeries and unorganized hotels,
restaurants, and cafes (Horeca)--where it has a leading 30% market
share. This strategic position benefits profitability, pass-through
capabilities, customer loyalty, and cash flow conversion, mainly
due to the small size of customers and lack of supply alternatives.
Compared to the modern retail channel--mainstream retailers and
organized Horeca--the traditional channel entails significantly
stronger bargaining power for Monbake, allowing for higher gross
margins and better pass-through capabilities. Also, exposure to the
traditional channel benefits cash conversion since the company
generally negotiates significantly shorter payment terms with
customers. We expect Monbake to continue strengthening its position
in this channel as it expands its capillary cold-chain commercial
network across new service areas in Spain. S&P said, "We see
limited competition in the traditional channel over the coming
years, based on smaller players' lower financial capabilities, the
retail and export-oriented focus of large players, and high
barriers to entry (capex requirements, economies of scale, strong
client loyalty, and difficulty to replicate distribution networks).
Nevertheless, we continue to see Monbake's scale as relatively
limited compared to that of its peers in the food space, while its
revenue base remains heavily concentrated in the Spanish market as
well as in bread-related products."
Monbake's operating performance should benefit from tailwinds in
the resilient frozen bread and bakery industry. Spain's bread and
bakery industry benefits from resilience during economic downturns.
This is thanks to the nondiscretionary nature of its products,
stemming from a lack of substitutes and relatively low product
prices. Indeed, the market expanded during the economic recession
in 2008-2013 and rebounded strongly over 2021-2023 following the
pandemic-led downturn in 2020. The broader industry--including
fresh and frozen baked goods--is expected to remain relatively
stable due to high household penetration in Spain. However, the
frozen baked goods segment is likely to continue growth by taking
market share from fresh bread and bakery products. Frozen baked
goods have advantages over freshly baked goods, such as flexibility
to meet fluctuating demand, reduced product waste, longer product
life, and higher profitability for retailers. Also, end consumers'
preferences support this trend, thanks to quality perception, lower
prices, ready access to recently baked goods, a wider range of
products, and increased food safety. S&P said, "We also note
limited free capacity in the frozen bread and bakery industry,
which may decrease further due to the amount of capex required to
accommodate expected increases in demand. We expect the widening
supply-demand gap to support profitability across the industry as
prices remain relatively stable while raw material prices continue
to decrease. On top of that, we see Monbake as well positioned to
capture growth, given its higher-than-average free capacity and
planned investments in capacity supported by adequate liquidity and
FOCF cushion."
S&P said, "The stable outlook reflects our view that Monbake will,
over the 12 months following the transaction, maintain a stable
operating performance, positive FOCF, adjusted debt leverage of
about 5.5x, and FFO cash interest coverage comfortably above 2.0x.
This is supported by our view that Monbake will retain its
leadership position in the profitable traditional channel of
Spain's frozen bread and bakery industry, while its modern retail
channel remains resilient to rising price pressures. Thanks to its
efficient operations and lasting commercial relationships with
small bakers and large retail accounts, the group should be able to
profitably navigate this competitive market."
Downside scenario
S&P said, "We could lower the rating in the next 12 months if,
contrary to our base case, Monbake's adjusted debt leverage rises
close to 7x or if FOCF turns negative with no prospects for a rapid
turnaround. This could happen if Monbake suffered a sharp volume
loss due to weaker-than-anticipated demand among small bakeries, or
was unable to quickly pass on a spike in main raw material and
energy costs to customers.
"We could also take a negative rating action if the group appeared
to be pursuing an aggressive financial policy, such as large
shareholder remuneration or debt-financed acquisitions, which is
not currently our base case."
Upside scenario
S&P said, "We could raise the rating if the company's credit
metrics improve versus our base case, such that adjusted debt
leverage decreases and remains below 5x, and we are confident the
company is committed to maintaining such debt leverage over the
long term.
"In addition, we would view as positive Monbake establishing a
track record of revenue, EBITDA, and FOCF expanding significantly
beyond our base-case forecasts for the next few years. This would
enable the company to achieve a much larger scale within the bread
and bakery industry in Europe, with notably improved geographic and
product category diversification. This could occur through strong
organic growth and successful expansion in new markets, product
segments, and adjacent categories, combined with continued
successful integration of new acquisitions.
"Environmental and social factors are an overall neutral
consideration in our credit rating analysis of Monbake. Indeed, the
company mostly produces bakery products for which we see no
meaningful environmental or social risk factors.
"As is the case of other private-equity owned companies, governance
is a negative factor, in our view. We believe the company's
aggressive financial risk profile points to corporate
decision-making that prioritizes the interests of the controlling
owners. This also reflects private equity owners' generally finite
holding periods and focus on maximizing shareholder returns."
===========
S W E D E N
===========
HILDING ANDERS: Invesco Dynamic Marks EUR5.2MM Loan at 59% Off
--------------------------------------------------------------
Invesco Dynamic Credit Opportunity Fund has marked its EUR5,216,000
loan extended Hilding Anders AB (Sweden) to market at EUR2,114,020
or 41% of the outstanding amount, as of February 29, 2024,
according to a disclosure contained in Invesco Dynamic's Form N-CSR
for the fiscal year ended February 29, 2024, filed with the U.S.
Securities and Exchange Commission.
Invesco Dynamic is a participant in a Term Loan (Acquired October
4, 2022 - July 21, 2023; Cost $4,353,393) to Hilding Anders. The
loan accrues at a rate of 9.11% (6 mo. EURIBOR + 5.00%). The loan
matures on December 31, 2024.
Invesco Dynamic is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended, as a closed-end
management investment company that is operated as an interval fund
and periodically offers its shares for repurchase.
Invesco Dynamic is led by Glenn Brightman, Principal Executive
Officer; and Adrien Deberghes, Principal Financial Officer. The
Fund can be reached through:
Glenn Brightman
Invesco Dynamic Credit Opportunity Fund
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Headquartered in Skane County, Sweden, Hilding Anders AB offers a
wide array of products that help people sleep better.
HILDING ANDERS: Invesco Dynamic Marks EUR5.5MM Loan at 100% Off
---------------------------------------------------------------
Invesco Dynamic Credit Opportunity Fund has marked its EUR5,480,000
loan extended Hilding Anders AB (Sweden) to market at a value
equivalent to 100% of the outstanding amount, as of February 29,
2024, according to a disclosure contained in Invesco Dynamic's Form
N-CSR for the fiscal year ended February 29, 2024, filed with the
U.S. Securities and Exchange Commission.
Invesco Dynamic is a participant in a Term Loan (Acquired January
1, 2020; Cost $61,527) to Hilding Anders. The loan matures on
December 31, 2024.
Invesco Dynamic is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended, as a closed-end
management investment company that is operated as an interval fund
and periodically offers its shares for repurchase.
Invesco Dynamic is led by Glenn Brightman, Principal Executive
Officer; and Adrien Deberghes, Principal Financial Officer. The
Fund can be reached through:
Glenn Brightman
Invesco Dynamic Credit Opportunity Fund
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Headquartered in Skane County, Sweden, Hilding Anders AB offers a
wide array of products that help people sleep better.
HILDING ANDERS: Invesco Dynamic Marks EUR5MM Loan at 100% Off
-------------------------------------------------------------
Invesco Dynamic Credit Opportunity Fund has marked its EUR5,009,000
loan extended Hilding Anders AB (Sweden) to market at a value
equivalent to 100% of the outstanding amount, as of February 29,
2024, according to a disclosure contained in Invesco Dynamic's Form
N-CSR for the fiscal year ended February 29, 2024, filed with the
U.S. Securities and Exchange Commission.
Invesco Dynamic is a participant in a Term Loan (Acquired October
4, 2022 – October 31, 2023; Cost $651,484) to Hilding Anders. The
loan accrues at a rate of 3.97% (6 mo. EURIBOR + 9.11%). The loan
matures on February 26, 2027.
Invesco Dynamic is a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended, as a closed-end
management investment company that is operated as an interval fund
and periodically offers its shares for repurchase.
Invesco Dynamic is led by Glenn Brightman, Principal Executive
Officer; and Adrien Deberghes, Principal Financial Officer. The
Fund can be reached through:
Glenn Brightman
Invesco Dynamic Credit Opportunity Fund
1555 Peachtree Street, N.E., Suite 1800
Atlanta, GA 30309
Tel: (713) 626-1919
Headquartered in Skane County, Sweden, Hilding Anders AB offers a
wide array of products that help people sleep better.
===========
T U R K E Y
===========
TURKCELL ILETISIM: S&P Upgrades ICR to 'BB-', Outlook Positive
--------------------------------------------------------------
S&P Global Ratings raised to 'BB-' from 'B+' the long-term issuer
credit rating on Turkish mobile phone operator Turkcell Iletisim
Hizmetleri A. S. (Turkcell) and the issue rating on the senior
unsecured debt.
The outlook is positive, in line with the outlook on the long-term
rating on Turkiye.
S&P said, "The upgrade of Turkcell follows a similar rating action
on Turkiye. On May 3, 2024, we raised our unsolicited long-term
sovereign credit rating on Turkiye to 'B+' from 'B'. The outlook is
positive. At the same time, we affirmed our unsolicited 'B'
short-term sovereign credit rating on Turkiye and raised our
unsolicited national scale ratings to 'trAA-/trA-1+' from
'trA/trA-1'. Finally, we revised our T&C assessment to 'BB-' from
'B+', signifying that the risk of the sovereign preventing
private-sector debtors from servicing foreign currency-denominated
debt is abating.
"We rate Turkcell above the sovereign foreign currency rating on
Turkiye because Turkcell passes our hypothetical sovereign default
stress test. The test assumes, among other factors, a 50%
devaluation of the lira (TRY) against hard currencies and a 20%
decline in organic EBITDA. This is mainly because the company keeps
about 75% of its cash in hard currencies. In the hypothetical case
of a further depreciation of the lira, we therefore think the
appreciation of the cash balance would offset the increase in
short-term debt maturities in foreign currencies and capital
expenditure. However, we cap our rating on Turkcell at the level of
our T&C assessment on Turkiye, where Turkcell generates most of its
cash flows. The T&C assessment reflects our view that Turkiye would
likely restrict access to foreign currency liquidity for Turkish
companies.
"The positive outlook on our long-term issuer credit rating on
Turkcell reflects that on the long-term rating on Turkiye. It also
reflects our expectation of the company's continued solid
operational performance. Our current assessment of Turkcell's 'bbb'
stand-alone credit profile reflects our expectation that its S&P
Global Ratings-adjusted debt-to-EBITDA ratio will be sustainably at
or below 1.5x over the next two years, while free operating cash
flow to debt will exceed 10%.
"We could revise the outlook to stable if we took the same action
on the sovereign.
"We could raise our rating on Turkcell if we revised upward our T&C
assessment on Turkiye to 'BB' and if Turkcell passed our
hypothetical sovereign default stress test."
===========================
U N I T E D K I N G D O M
===========================
AEA INTERNATIONAL: Moody's Affirms Ba3 CFR, Outlook Remains Stable
------------------------------------------------------------------
Moody's Ratings has affirmed AEA International Holdings (Lux)
S.a.r.l.'s (International SOS or I-SOS) Ba3 corporate family rating
and Ba3-PD probability of default rating. Concurrently, Moody's has
affirmed the Ba3 instrument ratings of the $686 million backed
senior secured term loan with maturity in 2028 issued by I-SOS and
the $100 million backed senior secured revolving credit facility
(RCF) due 2028 issued by AEA International Holdings Pte. Ltd. The
outlook for both entities remains stable.
RATINGS RATIONALE
The affirmation of I-SOS's Ba3 CFR reflects the company's long
track record of growth, which Moody's expects to continue after a
somewhat weaker operating performance over the past 18 months. The
company's credit profile is supported by its differentiated and
defensible market position as the only global integrated providers
of assistance and medical services, combined with solid underlying
market fundamentals. I-SOS has a good level of revenue visibility
through subscription revenues and multiyear contracts which further
underpins the rating.
Moody's continues to view I-SOS's rating as adequately positioned
in the Ba3 rating category, despite a recent weakening in the
company's credit metrics. During the 12 months period to December
31, 2023, the company's Moody's-adjusted Debt/EBITDA ratio
increased to 4.1x and Moody's-adjusted free cash flow turned
slightly negative. This followed a period of very strong operating
performance in financial year 2022, which was fuelled by large
one-off revenues related to the Afghan refugee crisis and COVID.
For the second half of financial year 2024, Moody's expects the
company to return to good revenue growth and at least stable
profitability, which should lead to some improvement in leverage
and free cash flow. For the financial year 2024, Moody's forecasts
I-SOS's leverage to reduce to around 3.7x and free cash flow to
turn positive again.
I-SOS's Ba3 CFR further reflects (1) the company's differentiated
business model and strong market position; (2) its strong track
record of growth with supportive market fundamentals; (3) the good
revenue visibility through subscription revenues and multiyear
contracts; and (4) its moderate leverage alongside a balanced
financial policy.
Conversely, the CFR is constrained by (1) the weaking in Medical
Services as revenues related to OAW and COVID phased out; (2) the
exposure to extractive industries and travel activity; (3) the
competition from unbundled offerings and requirement for high
digital investments; and (4) the industry's sensitivity to cyber
risks.
LIQUIDITY ANALYSIS
Moody's considers I-SOS's liquidity to be good. On December 31,
2023, the company had around $74 million of cash on balance sheet
and $65 million available under its $100 million revolving credit
facility (RCF) due 2028. This is expected to provide sufficient
headroom to support liquidity across a wide range of operating
companies in many jurisdictions, and working capital volatility.
The RCF is subject to a springing net leverage covenant tested when
the facility is drawn by more than 40%, under which Moody's expects
continued ample headroom.
STRUCTURAL CONSIDERATIONS
The senior secured facilities are rated Ba3, in line with the CFR,
reflecting the pari passu senior secured only debt structure. They
are guaranteed by material subsidiaries estimated to represent
around 65% of group EBITDA (as of the date the facilities were
entered into) and security is in the form of share pledges over
certain material subsidiaries incorporated in Luxembourg,
Australia, UK, US and Singapore. Whilst this security is therefore
limited given the broad international mix of operating companies,
it covers the top companies in the restricted group and majority of
intermediate holding companies and provides a single point of
enforcement.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that the company
will return to revenue growth over the next 12-18 months, resulting
in a leverage maintained at moderate levels and positive free cash
flow. The outlook further assumes that I-SOS will maintain a
balanced financial policy and a good liquidity profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on the rating could develop if I-SOS continues to
maintain solid operating metrics with revenue growth and at least
stable margins, Moody's-adjusted Debt/EBITDA reduces sustainably
below 3.5x, Moody's-adjusted Free Cash Flow/Debt is sustained above
10%, and liquidity remains good.
Downward pressure on the rating could develop if I-SOS's operating
metrics notably weaken through a revenue or margin contraction or a
material loss of contracts, liquidity concerns arise,
Moody's-adjusted Debt/EBITDA is sustained above 4.5x or
Moody's-adjusted Free Cash Flow/Debt reduces below 5%.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CORPORATE PROFILE
I-SOS is a leading global provider of assistance and medical
services to corporates, governments and other public entities with
headquarters in London and Singapore. The company is privately
owned with its equity mainly held by its founders Arnaud Vaissié,
Dr Pascal Rey-Herme and Laurent Sabourin, with minority
shareholders Copeba and Peugeot Invest each holding a stake of
around 15%. During the 12 months period ended December 31, 2023,
I-SOS generated revenues of $1.5 billion and a Moody's-adjusted
EBITDA of $203 million.
BUILDING SOLUTIONS: Goes Into Liquidation Following Fraud
---------------------------------------------------------
Punchline reports that a local building company has gone into
liquidation after being defrauded of almost GBP600,000 by its
account manager over a six year period.
Andrew Maxted, 57, of Horsemarling Farm, Standish Gate, near
Stonehouse, Gloucestershire, has admitted dishonestly abusing his
trusted position at Building Solutions Ltd to gain GBP596,497.29
for himself, Punchline relates.
He indicated a guilty plea at Cheltenham Magistrates Court last
month and was bailed unconditionally to attend Gloucester Crown
Court for sentence on May 25, 2024, Punchline discloses.
The charge states that his fraud went on from October 1, 2011, to
October 1, 2017, while he was accounts manager of the
long-established local company, Punchline notes.
According to Punchline, Companies House records show that the
company's current status is that it is in liquidation and being run
from the address of Smart Insolvency Solutions Ltd of Worcester.
CENTRICA PLC: S&P Rates New Subordinated Hybrid Securities 'BB+'
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' long-term issue rating to the
long-dated, optionally deferrable, and subordinated hybrid capital
securities to be issued by Centrica PLC (BBB/Stable/A-2). The final
size and tranching hinges on internal considerations at the time of
launch. The amount will be subject to market conditions; S&P
assumes it will likely range between GBP405 million and GBP450
million.
Centrica intends to use the proceeds to replace the GBP450 million
5.250% hybrid securities it issued in 2015, which have first call
dates in April 2025, launching an any-and-all tender offer to
repurchase the GBP450 million hybrids simultaneously to the
proposed new issue. S&P said, "We assess the proposed securities as
having intermediate equity content until their first reset date.
Because Centrica intends to replace the existing hybrid securities,
we reassessed their equity content as minimal. We view as
immaterial the potential net reduction of a maximum 10% of the
total stock of hybrids outstanding, as per our rating approach."
S&P said, "We consider the proposed hybrid securities to have
intermediate equity content until its first reset date because it
meets our criteria in terms of its ability to absorb losses and
preserve cash in times of stress, including through its
subordination and the deferability of interest at the company's
discretion in this period.
"In our view, Centrica is committed to maintaining hybrid capital
as a stable feature in its capital structure. Pro-forma closing of
the transaction, Centrica's total outstanding amount of hybrid
securities would stand below our upper limit of 15% of adjusted
capitalization at approximately 10%."
S&P arrives at its 'BB+' issue rating on the proposed securities by
notching down from our 'BBB' long-term issuer credit rating on
Centrica. As per S&P's methodology, the two-notch differential
reflects:
-- One notch for subordination because S&P's long-term issuer
credit rating on Centrica is investment grade (that is, higher than
'BB+'); and
-- An additional notch for payment flexibility, to reflect that
the deferral of interest is optional.
S&P said, "The notching indicates our view of a relatively low
likelihood that Centrica will defer interest. Should our view
change, we may deduct additional notches to derive the issue
rating. In addition, to reflect our view of the intermediate equity
content of the proposed securities, we allocate 50% of the related
payments as a fixed charge and 50% as equivalent to a common
dividend, in line with our hybrid capital criteria. The 50%
treatment of principal and accrued interest also applies to our
adjustment of debt.
"According to the proposed documentation, the interest to be paid
on the securities will increase by 25 basis points (bps) no earlier
than 11 years from issuance, and by an additional 75 bps 20 years
after the first reset date. We consider the cumulative 100 bps as a
material step-up and therefore effective maturity of the
instrument. This step-up provides an incentive for Centrica to
redeem the instruments. We would consequently remove our equity
content at the first reset date in 2030, when its effective
maturity falls below 20 years."
Key factors in S&P's assessment of the instrument's deferability
S&P said, "In our view, Centrica's option to defer payment on the
proposed securities is discretionary. This means that the issuer
may elect not to pay accrued interest on an interest payment date
because doing so is not an event of default. However, any deferred
interest payment will have to be settled in cash if the group
declares or pays a dividend on shares or interest on equally
ranking securities, and if the issuer redeems or repurchases shares
or equally ranking securities. Nevertheless, this condition remains
acceptable under our methodology because, once Centrica has settled
the deferred amount, it can still choose to defer on the next
interest payment date. Besides, documentation provides that in case
of deferral, all arrears of interest on the proposed hybrid
instrument must be settled five years after the initial decision to
defer. This meets the minimum requirements for intermediate equity
content under our hybrid criteria. But we note that inability to
pay arrears of interest on the hybrid instrument five years after
initial deferral would constitute an event of default for the
issuer itself."
Key factors in S&P's assessment of the instrument's subordination
The proposed security and coupons are intended to constitute
Centrica's direct, unsecured, and subordinated obligation, ranking
senior to its common shares.
FARFETCH LTD: S&P Downgrades ICR to 'D' Then Withdraws Rating
-------------------------------------------------------------
S&P Global Ratings lowered to 'D' from 'CC' its long-term issuer
credit rating on Farfetch Ltd. and withdrew all ratings on
Farfetch.
Farfetch Ltd. missed its convertible notes interest payment due on
May 1, 2024, amid the insolvency process that commenced after
delisting from the New York Stock Exchange (NYSE), effective Jan.
2, 2024. S&P said, "We consider Farfetch Ltd. to be in general
default and have lowered its long-term issuer credit rating to 'D'.
We have withdrawn all Farfetch ratings on the back of the English
law pre-pack administration process, lack of sufficient
information, and in line with the issuer's request."
GORDON HOTELS: Owes More Than GBP17 Million, Documents Show
-----------------------------------------------------------
Matt Simpson at Daily Echo reports that more than GBP17 million is
owed by a Bournemouth hotel fighting for its survival, new
documents have revealed.
According to Daily Echo, administrators were called in by the High
Court to sort out the finances of The Queens Hotel & Spa in Meyrick
Road, East Cliff, last month.
Gordon Hotels Ltd, which owns the hotel, took out a loan of GBP8.5
million from the specialist bank Cynergy in November 2022 after
purchasing it from the former shareholders earlier that year, Daily
Echo recounts.
However, Cynergy is now owed GBP9.1 million as a secured creditor,
but the administrators expect there will not be enough money left
to pay it back in full, Daily Echo states.
Meanwhile, unsecured creditors including traders, HMRC, and 4D
Hotels are owed GBP8.249 million and there is not enough money for
them, too, Daily Echo discloses.
According to joint administrators Philip Dakin and Janet Burt, of
London-based Kroll Advisory, trading performance at the hotel has
been "below expectations".
"The company has inherited substantial amounts of legacy creditors,
which were in part due to the restrictions brought about by the
Covid-19 pandemic, the effects of which were still impacting
trade," Daily Echo quotes the joint administrators as saying. "The
cost-of-living crisis was affecting booking volumes and inflation
had increased day-to-day costs. As a result of these factors, the
company was experiencing cash flow difficulties by mid-2023."
HMRC has also submitted claims of GBP864,000 that is, too, not
expected to be fully repaid at this stage, Daily Echo states.
According to the company's books and records, unsecured creditors
are owed GBP8.249 million.
The hotel continues to trade while a buyer is found, Daily Echo
discloses. To continue trading, Cynergy has provided GBP450,000 to
contribute towards paying the 44 staff members, according to Daily
Echo.
Agents have already been tasked with selling the hotel and a
"teaser" was sent to 815 interested parties around a fortnight
after the administration process began, Daily Echo notes.
According to Daily Echo, the administrators added: "The sale
process is ongoing and further details cannot be shared at this
point in order to avoid prejudicing the outcome."
JORDAN ALEXANDER: Put Into Liquidation
--------------------------------------
Cara Blackhall at EdinburghLive reports that a popular salon on
Edinburgh's Leith Walk has closed.
Jordan Alexander Salons, previously located on 378 Leith Walk, has
shut to customers with immediate effect with a sign on the door
alerting locals, EdinburghLive discloses.
After opening in June 2023, the business was put into liquidation
with WTM Cleghorn and ESL Porter, EdinburghLive relates. The
owners have confirmed that their salons in Edinburgh's West End and
Bathgate will remain open, EdinburghLive notes.
According to EdinburghLive, a sign posted on the door of their
Leith Walk salon reads: "Ham Sa LTD t/a Jordan Alexander Salons has
been placed into liquidation with WTM Cleghorn and ESL Porter, both
of Aver Chartered Accountants being appointed as joint Interim
Liquidators.
"Should you have any questions, please contact the office on 0330
555 6155 or email insolvency@aver-ca.com".
A spokesperson for Aver Chartered Accountants confirmed the closure
of the business to Edinburgh Live and said: "The company Ham Sah
Ltd that was trading from there as Jordan Alexander was placed into
liquidation on April 25 by the sheriff at Edinburgh Sheriff
Court".
LA VIE: Enters Liquidation, Owes GBP44,850 to Creditors
-------------------------------------------------------
Oliver Grady at The Sun reports that British Bake Off star Candice
Brown's media company La Vie En Farine has gone into liquidation
with debts at GBP44,850.
La Vie En Farine, which translates from French to English as "Life
in Flour", was reported on Companies House as a business of "public
relations and communications activities."
According to The Sun, Candice's firm owe GBP45,500 in corporation
tax and GBP250 in trade and expense creditors.
Its assets at liquidation reported as GBP35,500 owed to the
business by Ms. Brown -- estimated to realise "uncertain" -- and
GBP1,000 in cash, The Sun discloses.
Its debts and assets are reported in a statement of affairs signed
by Brown last month, The Sun notes. The liquidator is
Liverpool-based John Fisher, The Sun states.
MOLOSSUS BTL 2024-1: S&P Assigns BB+ (sf) Rating to F-Dfrd Notes
----------------------------------------------------------------
S&P Global Ratings has assigned credit ratings to Molossus BTL
2024-1 PLC's (Molossus 2024-1) class A notes and class B-Dfrd to
F-Dfrd and X-Dfrd interest deferrable notes. At closing, Molossus
2024-1 also issued unrated class G and Z notes and unrated
certificates.
Molossus 2024-1 is a static RMBS transaction that securitizes a
portfolio of buy-to-let mortgage loans secured on properties in the
U.K. The loans were originated by ColCap Financial UK Ltd. (ColCap
UK) and Molo Holdings No.1 Ltd. between 2019 and 2024.
ColCap UK is a wholly-owned subsidiary of ColCal Financial Overseas
Holdings Limited, which in turn is a wholly owned subsidiary of
ColCap Financial Ltd., a company incorporated in Australia.
At closing, the issuer used the issuance proceeds to purchase the
full beneficial interest in the mortgage loans from the seller. The
issuer grants security over all of its assets in favor of the
security trustee.
Credit enhancement for the rated notes consists of subordination
from the closing date and the general reserve account.
There are no rating constraints in the transaction under S&P's
counterparty, operational risk, or structured finance sovereign
risk criteria. It considers the issuer to be bankruptcy remote.
Ratings
CLASS RATING AMOUNT (MIL GBP)
A AAA (sf) 262.50
B-Dfrd AA (sf) 12.75
C-Dfrd A+ (sf) 9.30
D-Dfrd A- (sf) 7.50
E-Dfrd BBB (sf) 3.00
F-Dfrd BB+ (sf) 2.70
G NR 2.25
X-Dfrd BBB- (sf) 3.00
Z NR 1.50
Certs NR N/A
NR--Not rated.
N/A--Not applicable.
NEVER WHAT IF: Plans to Build Plymouth Hoe Hotel Still on the Cards
-------------------------------------------------------------------
William Telford at PlymouthLive reports that plans to build a
150-room hotel on Plymouth Hoe are still on the cards despite a
firm associated with the project going bust with debts of about
GBP10 million.
The boss of Propiteer Hotels Plymouth Ltd said he is still
committed to building on the site of the now demolished Quality
Hotel and plans will be submitted this summer, PlymouthLive
relates.
It comes as the holding company Never What if Group Ltd entered
liquidation with creditors expected to be left owed GBP9.837
million, PlymouthLive notes. Until last month, Never What if Group
Ltd, owned by David Marshall, was the parent company of Propiteer
Ltd, which in turn is the controlling party for Propiteer Hotels
Ltd which is in control of Propiteer Hotels Plymouth Ltd.,
PlymouthLive states.
Mr. Marshall, as cited by PlymouthLive, said: "Propiteer is
unaffected by the liquidation and there is no impact on the Hoe
project. We still are hoping to have the plans completed and
submitted over the summer."
In November 2023, software developer Capturehub Ltd, controlled by
Never What If Group Ltd and with Mr. Marshall as a director, went
into liquidation, PlymouthLive recounts. Documents filed at
companies house reveal Never What If Group Ltd owed GBP816,346 to
Capturehub, and GBP6.7 million to Hubfind Ltd, another Never What
If Group Ltd subsidiary, PlymouthLive relays.
Other creditors of Never What If Group Ltd include Barclays Bank,
claiming GBP714,582, and HM Revenue and Customs, claiming more than
GBP1 million, PlymouthLive states. Never What If Group Ltd's
statement of affairs totals creditors owed GBP10.462 million,
according to PlymouthLive.
PREFERRED 05-2: S&P Affirms 'BB (sf)' Rating on Class D1c Notes
---------------------------------------------------------------
S&P Global Ratings affirmed its 'A+ (sf)' credit ratings on
Preferred Residential Securities 05-2 PLC's class C1a and C1c
notes. S&P also affirmed its 'BB (sf)' and 'B- (sf)' ratings on the
class D1c notes and E1c notes, respectively.
The affirmations follow S&P's credit and cash flow analysis of the
transaction. Given the low pool factor, the transaction's excess
spread and reserve fund are currently both limited. The
affirmations also consider future pool performance, which may be
volatile given the low pool factor.
Overall, the transaction's credit performance is stable in terms of
losses, with less than 4% cumulative losses since closing. However,
arrears remain very high, reflecting the low pool factor. As of the
March 2024 investor report, arrears exceeding 90 days accounted for
48.36%. Despite increased reserve fund drawings, credit enhancement
has expanded for all outstanding notes following sequential
amortization. The transaction features a liquidity facility to
cover interest shortfalls if the reserve fund was to fully
deplete.
Credit analysis results
RATING LEVEL WAFF (%) WALS (%)
AAA 57.51 19.27
AA 52.15 11.82
A 48.91 3.58
BBB 45.35 2.00
BB 41.48 2.00
B 40.61 2.00
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
S&P said, "The class C1a and C1c notes pass stresses at higher
rating levels than those currently assigned. However, our ratings
on these notes are capped at our 'A+' long-term issuer credit
rating on the bank accounts provider, Barclays Bank PLC
(A+/Stable/A-1). We therefore affirmed our 'A+ (sf)' ratings on
these notes.
"In our cash flow analysis, considering the portfolio's
concentrated nature, the cash flow output for the class D1c notes
is sensitive to the increased fixed fees assumption and under the
assumption where arrears continue to remain high. We therefore
affirmed our 'BB (sf)' rating on the class D1c notes.
"We also affirmed our 'B- (sf)' rating on the class E1c notes. We
do not consider this tranche as vulnerable and dependent upon
favorable business, financial, and economic conditions to pay
timely interest and ultimate principal. In our cash flow analysis,
the notes did not pass our 'B' rating level cash flow stresses in
several cash flow scenarios. Therefore, we applied our 'CCC'
ratings criteria, to assess if either a 'B-' rating or a rating in
the 'CCC' category would be appropriate.
"In our cash flow analysis, we note that under a steady state
scenario, principal shortfalls on the E1c notes are small and occur
toward the end of the transaction life (after 2028-2029).
"We also do not consider repayment of the class E1c notes to be
dependent upon favorable business, financial, and economic
conditions. The credit enhancement for this tranche is increasing
due to sequential amortization. Furthermore, we do not expect this
tranche to experience short-term interest shortfalls, given the
considerable liquidity facility available to cover potential
interest shortfalls if the reserve fund were to deplete. We
therefore believe that the class E1c notes will be able to pay
timely interest and ultimate principal in a steady state scenario
commensurate with a 'B-' stress in accordance with our 'CCC'
ratings criteria."
Preferred Residential Securities 05-2 is a U.K. nonconforming RMBS
transaction originated by Preferred Mortgages Ltd.
PUDLO PRODUCTS: Bought Out of Administration
--------------------------------------------
Grant Prior at Construction Enquirer reports that Pudlo Products
Limited has been relaunched under new ownership after the historic
brand went into administration earlier this year.
Pudlo has a 150-year history but parent company DB Group (Holdings)
went into administration in February, Construction Enquirer
relates.
DB Holdings traded using the Pudlo name and also zero-cement
concrete brand Cemfree which used up a lot of company funds for
research.
According to Construction Enquirer, a new management team has
acquired the Pudlo name and taken on 12 staff after striking a deal
with the administrators.
Cemfree has been acquired by materials giant SigmaRoc, Construction
Enquirer discloses.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.
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