/raid1/www/Hosts/bankrupt/TCREUR_Public/250314.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
Friday, March 14, 2025, Vol. 26, No. 53
Headlines
F I N L A N D
CITYCON OYJ: S&P Lowers ICR to 'BB+' on Still Tight Credit Metrics
F R A N C E
DIOT-SIACI BIDCO: Moody's Affirms 'B2' CFR, Outlook Remains Stable
FNAC DARTY: S&P Affirms 'BB+' ICR & Alters Outlook to Stable
I R E L A N D
CAPITAL FOUR II: Moody's Affirms B3 Rating on EUR8.8MM Cl. F Notes
CARLYLE EURO 2018-1: Moody's Affirms B2 Rating on Class E Notes
CIFC EUROPEAN III: Moody's Affirms B2 Rating on EUR8.8MM F Notes
DRYDEN 56 EURO 2017: S&P Gives Prelim. B- Rating on Class F-R Notes
L U X E M B O U R G
AURIS LUXEMBOURG II: Moody's Alters Outlook on B3 CFR to Positive
N E T H E R L A N D S
BOELS TOPHOLDING: Moody's Cuts CFR to B1 & Alters Outlook to Stable
S P A I N
HBX GROUP: S&P Assigns 'BB-' Issuer Credit Rating, Outlook Stable
U N I T E D K I N G D O M
INVENT LEARNING: Springfields Advisory Named as Administrators
JH COMMERCIAL: 360 Insolvency Named as Administrators
MOVE TECHNOLOGIES: KR8 Advisory Named as Administrators
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F I N L A N D
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CITYCON OYJ: S&P Lowers ICR to 'BB+' on Still Tight Credit Metrics
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S&P Global Ratings lowered its long-term issuer credit rating on
Nordic owner and operator of grocery-anchored shopping centers
Citycon Oyj to 'BB+' from 'BBB-', while the issue rating on the
senior unsecured notes remains at 'BBB-' (recovery rating of '2',
with a substantial prospect of recovery), one notch above. This
reflects the reasonable and limited level of secured debt and the
valuation of the company's assets under stressed conditions. S&P
also lowered the short-term issuer credit rating to 'B' from 'A-3'.
At the same time, S&P lowered the issue rating on the hybrid notes
to 'B+' from 'BB'.
The stable outlook indicates that S&P expects Citycon's operating
performance will remain sound over the next 12 months, while the
company continues to report elevated leverage, with debt to debt
plus equity at or above 55% and interest coverage progressively
reducing toward 1.8x.
Citycon's debt to debt plus equity remained elevated at end-2024,
despite considerable asset disposals. S&P expects it will remain at
or above 55% over the next 12-24 months, given the company's
struggle to sell assets at a price that is in line with its book
value. Citycon reported a like-for-like negative valuation effect
of about 2.0% on its EUR3.7 billion portfolio, compared with 2023.
Net initial yields from earnings after adjusting for property
revaluation increased to 5.5%, from 5.3% in 2023, among rising
interest rates. Yet they remain low, compared with those of other
European rated peers that are exposed to retail assets.
Additionally, the company reported net fair value adjustments of
negative EUR79 million on a disposed EUR390 million portfolio,
which represents a 20.3% discount over book value (15.5% discount,
excluding goodwill write-down). A EUR32.5 million vendor loan
increases the discrepancy between value sold and cash received to
28.6%. Citycon's disposal of about 10% of its portfolio in 2024 had
therefore limited effects on its debt to debt plus equity, which
increased to 57.7% at end-2024, from 56.5% in 2023. Beyond that,
the company's cash flow-generating base reduced. S&P said, "We note
that Citycon intends to continue its disposal strategy, which,
along with the suspension of dividend payments in 2025, should
reduce leverage. Yet the decrease will not be substantial enough
for its debt to debt plus equity to improve below 55% in our
forecasts for the next 12-24 months. This is because we still
factor in revaluations of up to negative 2.5% in 2025 and up to
negative 1% in 2026, considering the relatively low yields of the
portfolio and recent track-record in discounts to book value during
disposals. This is also related to our intermediate equity content
treatment of the company's hybrid instruments in the limit of 15%
of Citycon's capitalization, as per our criteria. As the company
incurs valuation losses, its total capitalization reduces, which
increases the portion of hybrids exceeding the 15% mark. It
therefore loses its 50% equity treatment on this portion. We expect
the portion to be treated as full debt will represent EUR90
million-EUR110 million out of an approximately EUR600 million
hybrid pocket."
Despite the downgrade of the issuer credit rating to 'BB+', the
rating on Citycon's senior unsecured bonds remains at 'BBB-'. S&P
said, "In line with our criteria related to recovery for
non-investment-grade companies, we apply a one-notch uplift from
the issuer credit rating on the back of Citycon's material asset
base and moderate level of prior ranking debt."
S&P said, "As the company is actively replacing its debt at a
higher cost, we expect its interest coverage ratio will bottom out
at 1.8x-2.0x only over 2026-2027. Citycon has refinanced maturing
instruments over the past 12 months. These include a EUR300 million
6.5% green bond issued in March 2024, the exchange transaction on
its non-call 2024 hybrid instrument in June 2024, and the issuance
of a EUR350 million 5% green bond in December 2024. We expect the
company will use a combination of disposal proceeds and new
issuances to address upcoming maturities, such as the EUR350
million 1.25% eurobond maturing in September 2026 or the EUR300
million 2.375% eurobond due in January 2027, of which EUR242.5
million is still outstanding. Given the significant difference
between issuance coupon and legacy coupon on the balance sheet,
this will weaken its interest coverage ratio, which should bottom
out at 1.8x-2.0x over 2026-2027, from 2.0x at end-2024.
"We view negatively the increased turnover in the company's
management team and the weakening reporting quality. In October
2024, Henrica Ginström stepped down as CEO after just six months.
Scott Ball, the CEO from 2019 to 2024, assumed the position of
interim CEO, before naming Oleg Zaslavsky as the new CEO, effective
in March 2025. In November 2024, the then CFO Sakari Järvelä left
after less than a year in this position and was replaced by Eero
Sihvonen, who was CFO from 2005 to 2021. Jussi Vyyryläinen, head
of leasing, also announced his departure from the company. Although
we understand that the overall strategy will not change over the
short term, this lack of managerial continuity, especially during
such a transformational period, represents a potential risk, in our
view. Additionally, management's public communication has
deteriorated recently, especially due to ambiguous information.
This has materialized through brief and relatively vague press
releases regarding the terms associated with disposals closed and
recurrent internal positive revaluation during the first three
quarters of the year, which were then corrected downward materially
by external appraisers at the end of the fiscal period. This
happened several years in a row. We have therefore revised downward
our management and governance assessment to moderately negative,
from neutral previously. Although this does not directly affect the
rating at this stage, we will continue to monitor closely future
developments as we note that the new management is committed to
address these elements.
"The stable outlook reflects our view that the operating
performance should remain sound. Citycon reported an increase in
like-for-like net rental income of 4.6% in 2024, mostly supported
by indexation. Retail occupancy remains stable at 95.3%, while
footfall is up 1.1% and tenant sales are up 2.5% on a like-for-like
basis. The collection rate remains very high at 99% and the
relatively low occupancy cost ratio of 9.4% provides room for
rental growth. This sound operating performance reflects Citycon's
leading market positions of its shopping centers across the Nordics
and resilient tenant mix, with a high share of necessity-based
tenants. As a result, the company's adjusted debt to EBITDA
improved to 11.3x at end-2024, from 12.8x at end-2023, and should
remain at 10.0x-11.0x.
"Citycon has proactively addressed its upcoming maturities in a
timely manner, and we expect it will continue to do so. The company
reported a weighted average debt maturity of 3.4 years at end-2024,
from 2.7 years in 2023. This was thanks to debt repayments and bond
issuances that kept the metric above our three-year minimum
requirement for notching down the ratings on real estate companies.
We expect the company will remain prudent because it benefited from
about EUR360 million in cash on the balance sheet as of end-2024.
Citycon used part of it to repay a EUR150 million term loan in
February 2025, even though it will only mature in 2027. Proceeds
from asset disposals should also help maintain this metric at about
three years or above.
"The stable outlook indicates our expectation that, over the next
12 months, Citycon will continue to benefit from solid operating
performance, with positive like-for-life rental growth, stable
occupancy, and stable EBITDA margins. Overall, we estimate that
Citycon's interest coverage ratio will weaken slightly to 1.8x-2.0x
over the next 12 months, while debt to EBITDA should remain stable
at 10x-11x, and debt to debt plus equity will be about 55%-56%. We
also expect the company will manage its upcoming maturities and its
resource allocation, such that its weighted average debt maturity
remains at least at about three years.
"We could lower the rating if the company's credit metrics
deteriorate. This could happen if asset valuations declined
further, cash proceeds from asset disposals were materially lower
than the book value sold, the amount of assets sold was so
significant that it would shrink materially the portfolio size, or
if the company shifted to a more aggressive financial leverage
policy." This would translate into:
-- Debt to debt plus equity surpassing 60%;
-- Debt to EBITDA increasing beyond 13x; or
-- Interest coverage deteriorating below 1.8x.
S&P said, "We could also lower the rating if Citycon failed to
address its upcoming maturities in a timely manner, such that its
weighted average maturity would fall below the three-year mark on a
sustained basis, or if market conditions worsen and Citycon's
operating performance was significantly weaker than we expect. We
would also view negatively if the majority shareholder, G City,
were to actively increase its stake in Citycon and had more than
50% of voting rights, or if we considered that management and
governance concerns put pressure on the rating.
"We could take a positive rating action if Citycon manages to
reduce leverage, while preserving the integrity, quality, and
diversity of its asset portfolio. An upgrade would also depend on
the company's capacity to address its upcoming maturities and
sustainably restore its weighted average maturity level above the
three-year mark, and provide stability and best practice in terms
of management and governance." The upgrade would hinge on the
company maintaining credit metrics commensurate with a 'BBB-'
rating, such that:
-- Debt to debt plus equity reverts to well below 55%;
-- Interest coverage remains sustainably above 1.8x; and
-- Debt to EBITDA remains below 13x.
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F R A N C E
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DIOT-SIACI BIDCO: Moody's Affirms 'B2' CFR, Outlook Remains Stable
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Moody's Ratings affirmed the B2 corporate family rating and the
B2-PD probability of default rating of DIOT-SIACI BidCo SAS
(Diot-Siaci, or the group). Concurrently, Moody's have affirmed at
B2 the senior secured bank credit facilities of Acropole Holding
SAS. The outlook on these issuers remains stable.
DIOT-SIACI BidCo SAS is a leading corporate insurance broker in
France and one of the largest in Europe. It offers a range of
services across the insurance value chain, including consulting,
intermediation, and claims management. While its operations were
concentrated in France, Diot-Siaci has expanded its presence in
other European countries, particularly Switzerland, and to a lesser
extent in Asia, North America, and Middle East and Africa,
especially following the Nasco acquisition in 2024 enlarging the
footprint in the MENA region with EUR97 million revenues.
RATINGS RATIONALE
The affirmation of the ratings reflects the stable financial
performance of Diot-Siaci in 2024. Despite several add-ons to the
Term Loan B during the last two years reflecting an opportunistic
external growth strategy, the group has managed to keep its
leverage under control, within the 6x-6.5x range. Leverage remains
a constraint for the rating but was below Moody's expectations in
2024 mainly due to the good execution of M&A operations, the gain
in critical size in terms of revenues, and the improvement of both
business and geographic diversification. Going forward, Moody's
expects the group to pursue this strategy while managing its debt
burden prudently and preserving its profitability close to current
levels with an EBITDA margin of 26% in 2024 (Moody's calculations).
Moody's also considers positively the increase in diversification
and the continued high client retention rates, which Moody's
expects will reinforce Diot-Siaci earnings resilience and
stability.
The affirmation of the ratings is also supported by Diot-Siaci's
main strengths, such as (i) its leading position in France and in
continental Europe in the Business-to-Business (BtoB) insurance
brokerage market, (ii) its strong client retention rates which lead
to highly predictable revenues over time, (iii) its good and
improving business (notably to reinsurance and services) and
geographic (outside Europe, for example in the Middle-East)
diversification, and (iv) its stable EBITDA margin.
These strengths are partly offset by (i) a growth strategy
historically relying on acquisitions which can add pressure on
cash-flow generation and indebtedness, as evidenced by a
free-cash-flow to debt ratio below 2% on average and a leverage
above 6x, (ii) challenging macroeconomic environment with limits
profitability growth going forward, and (iii) competition from
global peers.
The B2 rating on the EUR1,350 million senior secured term loan and
B2 rating on the EUR231.5 million revolving credit facility reflect
Moody's views of the probability of default of Diot-Siaci, along
with Moody's loss given default (LGD) assessment of the debt
obligations and the absence of strong covenants.
OUTLOOK
The stable outlook reflects Moody's expectations of a stable EBITDA
margin remaining above 25% going forward, and that the financial
leverage ratio should improve to below 6.0x in 2025 in the absence
of further debt add-ons, as strong cash reserves and an undrawn RCF
of EUR231.5 million could be used by Diot-Siaci to finance
acquisitions. The outlook also reflects the stability of the
company's credit metrics within the current rating triggers, as
well as Moody's anticipations that Diot-Siaci external growth
strategy will continue. This would possibly affect financial
leverage and increase execution risks, although somewhat mitigated
by the group's solid track-record and stable organic growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Diot-Siaci's ratings could be upgraded in case of: (i) a financial
leverage ratio (Moody's calculations) reducing sustainably below
5.5x EBITDA, and (ii) EBITDA margin increasing sustainably to above
35%.
Conversely, Diot-Siaci's ratings could be downgraded in case of:
(i) a deterioration of the financial leverage to above 7.0x for a
sustained period, or (ii) a reduction in EBITDA margin below 20%
for a sustained period.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in February 2024.
FNAC DARTY: S&P Affirms 'BB+' ICR & Alters Outlook to Stable
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S&P Global Ratings revised the outlook on FNAC Darty S.A. to stable
from negative and affirmed the 'BB+' long term issuer credit
ratings and rating on the group's debt.
The stable outlook reflects S&P's expectation that Fnac will
successfully integrate Unieuro, realize synergies in line the
planned budget, reinforce its sales and EBITDA, and make progress
toward achieving its financial policy target of 1.5x, translating
into about 2x in its adjusted terms.
The acquisition of Unieuro expands Fnac's scale and geographic
diversification, somewhat alleviating the seasonality of its
business model. With a 17% market share in Italy, Unieuro is a
leading retailer of consumer electronics and domestic appliances in
Italy. In the fiscal year ended Feb. 28, 2024 (fiscal 2024), it
reported more than EUR2.6 billion of revenue and about EUR130
million of EBITDA, corresponding to a level of profitability of
about 5%. The integration of Unieuro meaningfully expands Fnac's
size, to about EUR10.5 billion revenue and about EUR665 million S&P
Global Ratings-adjusted EBITDA in 2024, on a 12-month pro forma
basis, compared with EUR7.9 billion revenue and EUR525 million S&P
Global Ratings-adjusted EBITDA over the same year for the
historical perimeter of Fnac. The acquisition also opens a new
market of operations for the group and will reduce Fnac's reliance
on France, which now represents about 62% of total revenue,
compared with about 83% in 2023. S&P also understands that
Unieuro's working capital pattern is somehow complementary to that
of Fnac's, with a working capital build-up being driven by Italian
seasonal sales in January-February and July-August, while Fnac's
working capital increases in the first half of the calendar year,
before a significant unwind that follows the calendar festivities
in France, such as the back-to-school period in September, black
Friday in November, and end-of-year holiday season. This should
mitigate to some extent the strong seasonality of Fnac's business
model and reduced to reliance of its EBITDA generation on the
second half of the calendar year.
S&P said, "Fnac's stand-alone operating performance improved in
line with our expectations, despite difficult trading conditions in
the first half of 2024. Excluding the acquisition of Unieuro,
reported revenue improved by 0.7% in 2024, up by 40 basis points
compared with our expectations, while the French consumer retail
market declined by about 2%, according to Banque de France. The
group benefitted from a reduction of inflation, accompanied by an
improvement in consumer confidence, thanks to its premium placement
and diverse products and services offering and its omnichannel
positioning that combines a profitable online platform with
attractive store locations. The strong contribution of services
upheld the group's gross margin and this, combined with the group's
ability to pass through inflationary pressure to consumers and its
cost-saving initiatives resulted in a S&P Global Ratings-adjusted
EBITDA of EUR525 million and an adjusted EBITDA margin of 6.6%, in
line with our expectations. Finally, the group's savvy working
capital management freed up EUR118 million of FOCF after leases,
about EUR20 million above our previous expectations."
Although the acquisition of Unieuro will weigh temporarily on the
group's credit metrics, Fnac's strong free cash flow generation
keeps the group solidly anchored in its financial risk profile
category. S&P said, "With inflationary pressure easing further and
consumer spending picking up from its low point in 2024,
particularly in Italy, we forecast revenue growth of about 1.2% in
2025 and 0.8% in 2026, supported by the integration of artificial
intelligence in consumer electronics, a strong pipeline of gaming
releases, and the continued growth in services. Although the group
expects to realize about EUR20 million of cost synergies over the
next two years, the acquisition of Unieuro will temporarily dilute
the group's profitability, given its higher reliance than Fnac on
promotional activity. We forecast about EUR670 million S&P Global
Ratings adjusted EBITDA and an adjusted EBITDA margin of about 6.3%
in 2025, below Fnac's historical average of about 7.5%. The
acquisition also implies an additional burden of about EUR415
million of lease liabilities on the group's balance sheet, which
increases our adjusted debt-to-EBITDA ratio to 2.5x in 2025, from
2.4x in 2024 (2.1x excluding the deconsolidation of the ticketing
activity). That said, Fnac's strong FOCF after leases generation,
which we expect to remain at least about EUR100 million in 2025,
will allow the group to retain its net cash position at year-end
2025 and maintain a level of financial flexibility that is
commensurate with the rating level."
S&P said, "We will monitor the evolution of the joint venture with
VESA Equity Investment and its impact on our adjusted credit
metrics. The acquisition of Unieuro was carried out in conjunction
with its majority shareholder Vesa, the investment vehicle of
Daniel Kretinsky, which currently holds about 28.2% of Fnac. Fnac
retains about 51% of the joint investment vehicle that bought
Unieuro, but it has full control over its operations and fully
consolidates Unieuro in its accounts. A proportional consolidation
of Unieuro in Fnac's accounts would have no material impact on our
adjusted credit metrics, given the relatively higher weight of
operating leases added to the group's balance sheet compared with
the proportionally retained EBITDA improvement. The shareholder
agreement between Fnac and Vesa imposes the distribution of
Unieuro's levered free cash flow to shareholders and, in our
forecasts, we have accounted for the potential cash leakage
resulting from the joint venture by including up to EUR15 million
additional dividends distributed to the minority investor over our
three-year forecast. Moreover, Fnac benefits from a call option on
Vesa's stake in Unieuro that can be exercised between June 2026 and
June 2028. Although we understand that the preferred financing for
the call option is through an issuance of new Fnac's shares, we
cannot completely rule out a cash- or debt-financed payment,
potentially causing volatility in our adjusted credit metrics.
"The group's conservative financial policy solidly underpin the
rating. Despite the somewhat heavier capital structure that results
from the acquisition of Unieuro, Fnac's management remains
committed to a net leverage target of about 1.5x (about 2x in our
adjusted terms) at the year-end and expect to achieve this in the
next three years." The financial policy commitment is supportive of
the current 'BB+' long-term issuer credit rating on Fnac.
Vesa has become more involved with the group, but so far this has
not translated into a change in the group's strategy and credit
metrics. Vesa has demonstrated commitment as a long-term
shareholder of the group. It has been Fnac's majority shareholder
for the past two years and provided significant financing for the
joint acquisition of Unieuro. Its current stake remains below the
controlling stake threshold (30%) and it has not nominated any
member of the board of directors. S&P does not know if the
involvement in the Unieuro transaction signals an intention to take
control; neither do we know how such a transaction would be
financed and what the potential impact on Fnac's credit metrics
might be.
S&P said, "The stable outlook reflects our expectation that Fnac
will successfully integrate Unieuro, achieve synergies in line the
planned budget, reinforce its sales and EBITDA, and benefit from a
solid market position in the consumer electronics and domestic
appliances industries. We forecast S&P Global Ratings-adjusted
leverage at about 2.5x and positive FOCF after leases in excess of
EUR100 million per year over 2025-2026."
S&P's deleveraging expectation are also underpinned by the
company's conservative financial policy.
S&P could lower the rating if weaker-than-expected operating
performance results in:
-- Reported FOCF after leases below EUR100 million;
-- Adjusted debt to EBITDA approaching 3x; or
-- Adjusted funds from operations (FFO) to debt declining below
30%.
This could stem from strains on consumer discretionary spending
amid a very competitive landscape, or any direct substantial impact
from global supply chain disruptions due to geopolitical tensions.
A downgrade could also arise from a more aggressive financial
policy than we anticipate that cuts into the group's cash balance
and credit metrics.
Although unlikely over the near term, S&P could consider an upgrade
if Fnac meaningfully increased its service offerings and other
product initiatives that provide more stable revenue, reducing
intrayear working capital volatility. This would result in cash
generation more evenly balanced between quarters and would allow
the group to materially improve the EBITDAR coverage ratio,
reflecting enhanced financial flexibility. In addition, an upgrade
would be contingent on Fnac's bolstering its financial risk
profile, which entails:
-- Adjusted debt to EBITDA reducing below 2x over a sustained
period; and
-- Adjusted FFO to debt approaching 45%.
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CAPITAL FOUR II: Moody's Affirms B3 Rating on EUR8.8MM Cl. F Notes
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Moody's Ratings has upgraded the ratings on the following notes
issued by Capital Four CLO II DAC:
EUR22,300,000 Class B-1 Senior Secured Floating Rate Notes due
2034, Upgraded to Aa1 (sf); previously on Jan 22, 2021 Definitive
Rating Assigned Aa2 (sf)
EUR7,500,000 Class B-2 Senior Secured Fixed Rate Notes due 2034,
Upgraded to Aa1 (sf); previously on Jan 22, 2021 Definitive Rating
Assigned Aa2 (sf)
EUR23,600,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2034, Upgraded to A1 (sf); previously on Jan 22, 2021
Definitive Rating Assigned A2 (sf)
Moody's have also affirmed the ratings on the following notes:
EUR217,000,000 Class A Senior Secured Floating Rate Notes due
2034, Affirmed Aaa (sf); previously on Jan 22, 2021 Definitive
Rating Assigned Aaa (sf)
EUR24,500,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2034, Affirmed Baa3 (sf); previously on Jan 22, 2021
Definitive Rating Assigned Baa3 (sf)
EUR20,100,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2034, Affirmed Ba3 (sf); previously on Jan 22, 2021
Definitive Rating Assigned Ba3 (sf)
EUR8,800,000 Class F Senior Secured Deferrable Floating Rate Notes
due 2034, Affirmed B3 (sf); previously on Jan 22, 2021 Definitive
Rating Assigned B3 (sf)
Capital Four CLO II DAC, issued in January 2021, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by Capital Four CLO Management K/S ("Capital Four
Management"). The transaction's reinvestment period ended in
January 2025.
RATINGS RATIONALE
The upgrades to the ratings on the Class B-1, B-2 and C notes are
due to the transaction having reached the end of the reinvestment
period in January 2025.
The affirmations on the ratings on the Class A, D, E and F notes
are primarily a result of the expected losses on the notes
remaining consistent with their current rating levels, after taking
into account the CLO's latest portfolio, its relevant structural
features and its actual over-collateralisation ratios.
In light of reinvestment restrictions during the amortisation
period, and therefore the limited ability to effect significant
changes to the current collateral pool, Moody's analysed the deal
assuming a higher likelihood that the collateral pool
characteristics would maintain an adequate buffer relative to
certain covenant requirements.
The key model inputs Moody's uses in Moody's analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on Moody's published methodology
and could differ from the trustee's reported numbers.
In Moody's base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR347.2m
Defaulted Securities: EUR5.5m
Diversity Score: 56
Weighted Average Rating Factor (WARF): 2985
Weighted Average Life (WAL): 4.39 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.80%
Weighted Average Coupon (WAC): 3.35%
Weighted Average Recovery Rate (WARR): 43.7%
Par haircut in OC tests and interest diversion test: none
The default probability derives from the credit quality of the
collateral pool and Moody's expectations of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into Moody's cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2024.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, using the methodology "Moody's Approach to
Assessing Counterparty Risks in Structured Finance" published in
October 2024. Moody's concluded the ratings of the notes are not
constrained by these risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
-- Portfolio amortisation: Having reached the end of the
reinvestment period in January 2025, the main source of uncertainty
in this transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
-- Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's
over-collateralisation levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's analysed
defaulted recoveries assuming the lower of the market price or the
recovery rate to account for potential volatility in market prices.
Recoveries higher than Moody's expectations would have a positive
impact on the notes' ratings.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
Moody's other analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
CARLYLE EURO 2018-1: Moody's Affirms B2 Rating on Class E Notes
---------------------------------------------------------------
Moody's Ratings has upgraded the ratings on the following notes
issued by Carlyle Euro CLO 2018-1 DAC:
EUR22,500,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2031, Upgraded to Aa1 (sf); previously on Sep 16, 2024
Upgraded to A2 (sf)
EUR22,100,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2031, Upgraded to Baa3 (sf); previously on Sep 16, 2024
Affirmed Ba2 (sf)
Moody's have also affirmed the ratings on the following notes:
EUR36,750,000 (Current outstanding amount is EUR34,656,949) Class
A-2-A Senior Secured Floating Rate Notes due 2031, Affirmed Aaa
(sf); previously on Sep 16, 2024 Affirmed Aaa (sf)
EUR30,000,000 (Current outstanding amount is EUR28,291,387) Class
A-2-B Senior Secured Fixed Rate Notes due 2031, Affirmed Aaa (sf);
previously on Sep 16, 2024 Affirmed Aaa (sf)
EUR28,500,000 Class B Senior Secured Deferrable Floating Rate
Notes due 2031, Affirmed Aaa (sf); previously on Sep 16, 2024
Upgraded to Aaa (sf)
EUR12,750,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2031, Affirmed B2 (sf); previously on Sep 16, 2024
Affirmed B2 (sf)
Carlyle Euro CLO 2018-1 DAC, issued in April 2018, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by CELF Advisors LLP. The transaction's reinvestment period
ended in October 2022.
RATINGS RATIONALE
The rating upgrades on the Class C and Class D notes are primarily
a result of the significant deleveraging of the senior notes
following amortisation of the underlying portfolio since the last
rating action in September 2024.
The affirmations on the ratings on the Class A-2-A, Class A-2-B,
Class B and Class E notes are primarily a result of the expected
losses on the notes remaining consistent with their current rating
levels, after taking into account the CLO's latest portfolio, its
relevant structural features and its actual over-collateralisation
ratios.
Since the last rating action in September 2024, the most senior
Class A-1 notes have paid down in full and Class A-2-A and Class
A-2-B notes have started to amortise, paying down by approximately
6.0%. As a result of the deleveraging, over-collateralisation (OC)
has increased across the capital structure. According to the
trustee report dated February 2025 [1] the Class A, Class B, Class
C, Class D and Class E OC ratios are reported at 254.29%, 175.04%,
140.48%, 117.66% and 107.58% compared to August 2024 [2] levels of
175.57%, 144.45%, 126.72%, 113.08% and 106.47% respectively.
The deleveraging and OC improvements primarily resulted from high
prepayment rates of leveraged loans in the underlying portfolio.
Most of the prepaid proceeds have been applied to amortise the
liabilities. All else held equal, such deleveraging is generally a
positive credit driver for the CLO's rated liabilities.
The key model inputs Moody's uses in Moody's analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on Moody's published methodology
and could differ from the trustee's reported numbers.
In Moody's base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR160.4m
Defaulted Securities: EUR0m
Diversity Score: 31
Weighted Average Rating Factor (WARF): 3199
Weighted Average Life (WAL): 2.98 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.66%
Weighted Average Coupon (WAC): 3.61%
Weighted Average Recovery Rate (WARR): 44.03%
Par haircut in OC tests and interest diversion test: 0%
The default probability derives from the credit quality of the
collateral pool and Moody's expectations of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into Moody's cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2024.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank, using the
methodology "Moody's Approach to Assessing Counterparty Risks in
Structured Finance" published in October 2024. Moody's concluded
the ratings of the notes are not constrained by these risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
-- Portfolio amortisation: The main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
Moody's other analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
CIFC EUROPEAN III: Moody's Affirms B2 Rating on EUR8.8MM F Notes
----------------------------------------------------------------
Moody's Ratings has upgraded the ratings on the following notes
issued by CIFC European Funding CLO III DAC:
EUR15,000,000 Class B-1 Senior Secured Floating Rate Notes due
2034, Upgraded to Aa1 (sf); previously on Jan 21, 2021 Definitive
Rating Assigned Aa2 (sf)
EUR20,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2034,
Upgraded to Aa1 (sf); previously on Jan 21, 2021 Definitive Rating
Assigned Aa2 (sf)
EUR21,900,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2034, Upgraded to A1 (sf); previously on Jan 21, 2021
Definitive Rating Assigned A2 (sf)
Moody's have also affirmed the ratings on the following notes:
EUR217,000,000 Class A Senior Secured Floating Rate Notes due
2034, Affirmed Aaa (sf); previously on Jan 21, 2021 Definitive
Rating Assigned Aaa (sf)
EUR22,700,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2034, Affirmed Baa3 (sf); previously on Jan 21, 2021
Definitive Rating Assigned Baa3 (sf)
EUR18,400,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2034, Affirmed Ba2 (sf); previously on Jan 21, 2021
Definitive Rating Assigned Ba2 (sf)
EUR8,800,000 Class F Senior Secured Deferrable Floating Rate Notes
due 2034, Affirmed B2 (sf); previously on Jan 21, 2021 Definitive
Rating Assigned B2 (sf)
CIFC European Funding CLO III DAC, issued in January 2021, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by CIFC Asset Management Europe Ltd. The transaction's
reinvestment period ended in January 2025.
RATINGS RATIONALE
The rating upgrades on the Class B-1, Class B-2 and Class C notes
are primarily a result of the transaction having reached the end of
the reinvestment period in January 2025.
The affirmations on the ratings on the Class A, Class D, Class E
and Class F notes are primarily a result of the expected losses on
the notes remaining consistent with their current rating levels,
after taking into account the CLO's latest portfolio, its relevant
structural features and its actual over-collateralisation ratios.
In light of reinvestment restrictions during the amortisation
period, and therefore the limited ability to effect significant
changes to the current collateral pool, Moody's analysed the deal
assuming a higher likelihood that the collateral pool
characteristics would maintain an adequate buffer relative to
certain covenant requirements.
The key model inputs Moody's uses in Moody's analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on Moody's published methodology
and could differ from the trustee's reported numbers.
In Moody's base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR349.6m
Diversity Score: 58
Weighted Average Rating Factor (WARF): 2951
Weighted Average Life (WAL): 4.29 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.96%
Weighted Average Coupon (WAC): 5.17%
Weighted Average Recovery Rate (WARR): 43.35%
The default probability derives from the credit quality of the
collateral pool and Moody's expectations of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into Moody's cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2024.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, using the methodology "Moody's Approach to
Assessing Counterparty Risks in Structured Finance" published in
October 2024. Moody's concluded the ratings of the notes are not
constrained by these risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
-- Portfolio amortisation: The main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
Moody's other analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
DRYDEN 56 EURO 2017: S&P Gives Prelim. B- Rating on Class F-R Notes
-------------------------------------------------------------------
S&P Global Ratings assigned preliminary ratings to Dryden 56 Euro
CLO 2017 DAC's class A loan and class A-R, B-1-R, B-2-R, C-R,
D-1-R, D-2, E-R, and F-R notes. The issuer currently has EUR63.85
million of unrated subordinated notes outstanding from the existing
transaction. At closing, the issuer will also issue an additional
EUR51.10 million of subordinated notes, bringing the total amount
of subordinated notes to EUR114.95 million.
The preliminary ratings assigned to 's reset notes 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 loan and notes through collateral
selection, ongoing portfolio management, and trading.
-- The transaction's legal structure, which S&P expects to be
bankruptcy remote.
-- The transaction's counterparty risks, which S&P expects to be
in line with our counterparty rating framework.
Portfolio benchmarks
S&P weighted-average rating factor 2,766.44
Default rate dispersion 637.34
Weighted-average life (years) 4.59
Weighted-average life (years) extended
to cover the length of the reinvestment period 4.95
Obligor diversity measure 101.06
Industry diversity measure 24.00
Regional diversity measure 1.15
Transaction key metrics
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.80
Target 'AAA' weighted-average recovery (%) 38.55
Target weighted-average spread (net of floors; %) 3.92
Target weighted-average coupon (%) 3.44
Rationale
Under the transaction documents, the rated loan and notes will pay
quarterly interest unless a frequency switch event occurs.
Following this, the loan and notes will switch to semiannual
payments. The portfolio's reinvestment period will end
approximately 4.5 years after closing.
S&P said, "At closing, we expect the portfolio to be
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."
The issuer may purchase loss mitigation obligations using either
interest proceeds or principal proceeds. The use of interest
proceeds to purchase loss mitigation obligations is subject to all
the interest coverage tests passing by at least 25% following the
purchase, and the manager determining that there are sufficient
interest proceeds to pay interest on all the rated notes on the
upcoming payment date, including senior expenses, and the par value
tests passing.
The use of principal proceeds to purchase loss mitigation
obligations is subject to the following conditions:
-- The aggregate collateral balance remaining above reinvestment
target par or, if not, the amount of principal proceeds used cannot
not exceed the outstanding balance of the related asset.
-- The class E-R notes par value test passing during the
reinvestment period and the class F-R notes par value test passing
after the reinvestment period. As a result, S&P has assumed no
credit given to the reinvestment overcollateralization test in its
cash flow modeling.
-- The obligation meeting the restructured obligation criteria.
-- The obligation ranking pari passu or senior to the obligation
already held by the issuer.
-- Its maturity falling before the rated notes' maturity date.
-- It not being purchased at a premium
S&P said, "In our cash flow analysis, we used the EUR500 million
target par amount, the covenanted weighted-average spread (3.80%),
the covenanted weighted-average coupon (3.30%), and the covenanted
weighted-average recovery rates calculated in line with our CLO
criteria for all classes of notes and the loan. 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.
"Until the end of the reinvestment period on Sept. 14, 2029, the
collateral manager may substitute assets in the portfolio as 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
the transaction's exposure to country risk sufficiently mitigated
at the assigned preliminary ratings.
"At closing, we expect the transaction's documented counterparty
replacement and remedy mechanisms to adequately mitigate its
exposure to counterparty risk under our counterparty criteria.
"We expect the transaction's legal structure and framework to be
bankruptcy remote, in line with our legal criteria.
"The CLO will be managed by PGIM Loan Originator Manager Ltd. and
PGIM Ltd., and the maximum potential rating on the liabilities is
'AAA' under our operational risk criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe the preliminary ratings
are commensurate with the available credit enhancement for the
class A loan and A-R to F-R notes. Our credit and cash flow
analysis indicates that the available credit enhancement for the
class B-1-R to F-R notes could withstand stresses commensurate with
higher ratings than those 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 preliminary ratings on the notes.
"Given our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our preliminary ratings
are commensurate with the available credit enhancement for all the
rated classes of notes and the loan.
"In addition to our standard analysis, to indicate how rising
pressures among speculative-grade corporates could affect our
ratings on European CLO transactions, we also included the
sensitivity of the ratings on the A loan and class A-R to E-R notes
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-R notes."
Environmental, social, and governance
S&P said, "We regard the transaction's exposure to environmental,
social, and governance (ESG) credit factors as broadly in line with
our benchmark for the sector. Primarily due to the diversity of the
assets within CLOs, the exposure to environmental and social credit
factors is viewed as below average, while governance credit factors
are average. For this transaction, the documents prohibit or limit
certain assets from being related to certain activities.
Accordingly, since the exclusion of assets from these activities
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."
Dryden 56 Euro CLO 2017 DAC is a European cash flow CLO
securitization of a revolving pool, comprising mainly
euro-denominated leveraged loans and bonds. The transaction is a
broadly syndicated CLO that will be managed by PGIM Loan Originator
Manager Ltd. and PGIM Ltd.
Ratings list
Prelim. Prelim. Amount Credit
Class rating* (mil. EUR) Interest rate§ enhancement
(%)
A-R AAA (sf) 275.00 Three/six-month EURIBOR 38.00
plus 1.28%
A loan AAA (sf) 35.00 Three/six-month EURIBOR 38.00
plus 1.28%
B-1-R AA (sf) 32.50 Three/six-month EURIBOR 27.50
plus 1.80%
B-2-R AA (sf) 20.00 4.60% 27.50
C-R A (sf) 27.50 Three/six-month EURIBOR 22.00
plus 2.15%
D-1-R BBB- (sf) 35.00 Three/six-month EURIBOR 15.00
plus 3.00%
D-2 BBB- (sf) 4.50 Three/six-month EURIBOR 14.10
plus 3.75%
E-R BB- (sf) 22.50 Three/six-month EURIBOR 9.60
plus 5.00%
F-R B- (sf) 15.50 Three/six-month EURIBOR 6.50
plus 8.01%
Sub notes 114.95 N/A N/A
*The preliminary ratings assigned to the class A loan, and class
A-R, B-1-R, and B-2-R notes address timely interest and ultimate
principal payments. The preliminary ratings assigned to the class
C-R, D-1-R, D-2, E-R, and F-R 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.
===================
L U X E M B O U R G
===================
AURIS LUXEMBOURG II: Moody's Alters Outlook on B3 CFR to Positive
-----------------------------------------------------------------
Moody's Ratings has affirmed Auris Luxembourg II S.A.'s (WSA or the
company) B3 corporate family rating and B3-PD probability of
default rating. Concurrently, Moody's affirmed the B3 instrument
ratings for the EUR1,900 million senior secured term loan B5, the
$1,085 million senior secured term loan B (both due in February
2029), and the EUR350 million senior secured revolving credit
facility (RCF) due in 2028, all issued by Auris Luxembourg III S.a
r.l. The outlook of all entities has been changed to positive from
stable.
RATINGS RATIONALE
The rating action reflects WSA's good operating performance in
fiscal year ended September 2024 (fiscal 2024) and Moody's
expectations that the company will continue to improve its margins
on a steadily basis over the next 12 to 18 months driven by ongoing
cost improvements and new product launches. Moody's expects credit
metrics to improve materially by end fiscal year 2025: leverage, as
measured by Moody's-adjusted debt to EBITDA, towards 6x from the
currently still high levels of 7.0x in fiscal 2024; interest
coverage (EBITA to interest) to improve towards 2x and free cash
flow (FCF) to turn positive, driven by higher margins, reduced
interest burden following the company's recent repricing in October
2024 as well as one-off costs linked to recent refinancing closed
in April 2024.
In fiscal 2024, WSA's revenue grew by 7% (10% organically) driven
by new product launches and strong volume. Moody's-adjusted EBITDA
margin increased from 15.4% in fiscal 2023 to 16.7% in fiscal 2024.
Consequently, leverage improved, decreasing to around 7.0x in
fiscal 2024. Despite this improvement, leverage remained at the
higher end of the guidance for a B3 rating. However, Moody's
anticipates mid-single-digit revenue growth for fiscal 2025 and
2026 and EBITDA expansion is expected to outpace revenue growth due
to several cost improvement initiatives implemented late last year.
These initiatives, including reducing costs of returns and repairs,
optimizing indirect procurement, driving pricing increases, and
transforming the R&D structure by extracting synergies between the
Widex and Signia platforms, are expected to contribute EUR100
million to EBITDA in the next 3 years.
Moody's expects Moody's-adjusted FCF to turn positive in fiscal
2025 and reach around EUR50-80 million, then towards EUR150-180
million in fiscal 2026. The improved cash flow generation will be
driven by EBITDA growth and lower debt servicing payments following
the repricing transaction completed late last year. This will
translate into a Moody's-adjusted FCF/debt in the low to mid-single
digits percentages by the end of fiscal 2026.
The rating action also reflects Moody's expectations that the
company will successfully implement its cost improvement
initiatives and focus on deleveraging in the next 12-18 months.
Successfully delivering on these cost initiatives, improving
margins and FCF, and establishing a track record of good
performance are essential factors for further upward rating
changes.
The rating continues to be supported by the company's prominent
position in the global hearing aid market; its operations in a
low-cyclical demand industry with steady growth; its strong
diversification across geography with a presence on all continents;
its various distribution channels to end users including retail
chains, independent dispensers, and public-sector bodies; and its
diversified brand portfolio with a wide range of technologies.
Conversely, the rating reflects WSA's ratings are constrained by
its still weak, albeit improving, credit metrics. It also
incorporates risks associated with technological advancements,
pricing competition and the risk of debt funded acquisitions which
could delay deleveraging.
LIQUIDITY
WSA's liquidity is adequate. As of December 31, 2024, it had EUR100
million of cash and EUR215 million available under the EUR350
million revolving credit facility. In the next 12-18 months,
Moody's forecasts annual FCF generation in a range of EUR50 to
EUR100 driven by EBITDA growth, lower interests and materially
lower one-off expenses.
STRUCTURAL CONSIDERATIONS
The senior secured term loans and the senior secured revolving
credit facility are rated B3, in line with the corporate family
rating (CFR). The B3-PD probability of default rating, in line with
the B3 CFR, reflects Moody's 50% corporate family recovery
assumption. The instruments share the same security package, rank
pari passu and are guaranteed by a group of companies representing
at least 80% of the consolidated group's EBITDA. The security
package, consisting of shares, bank accounts and intragroup
receivables, is considered limited. The RCF includes a springing
secured net leverage covenant set at 9.17x, tested only when the
RCF is drawn above 40%. Moody's estimates sufficient capacity in
the covenant in case the RCF is used.
OUTLOOK
The positive outlook reflects the improving trajectory of the
company's key credit metrics over the next 12 to 18 months, driven
by cost improvement initiatives and continued mid-single digit
revenue growth, with leverage expected to reduce towards 6x, FCF to
debt to increase towards 5% and interest cover ratio to improve
towards 2x in the next 12 to 18 months.
The positive outlook on the ratings can be stabilized if in the
next 12 months the company fails to deliver on its business plan
objectives, including steady margin improvements, leverage
reduction, positive FCF generation and improvement in interest
coverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if WSA continues to uphold its leading
market position and it continues to improve its credit metrics with
Moody's-adjusted debt/EBITDA decreasing below 6.0x,
Moody's-adjusted EBITA to interest expense improving above 2.0x,
and Moody's-adjusted FCF to debt improving above 5%, all on a
sustained basis.
Downward rating pressure could materialize if WSA experiences a
decline in its market position or fails to demonstrate a steady
deleveraging to Moody's-adjusted debt to EBITDA below 7.0x,
Moody's-adjusted EBITA to interest does not improve to above 1.25x,
WSA generates negative free cash flow, or experiences a
deterioration in liquidity.
RATING METHODOLOGY
The principal methodology used in these ratings was Medical
Products and Devices published in October 2023.
COMPANY PROFILE
WSA is among the global leaders in the hearing aid industry and
operates in over 125 countries. The company is privately owned by
the Tøpholm and Westermann families, the Lundbeck Foundation,
and EQT-managed funds. In fiscal 2024, Auris Luxembourg II S.A.
generated EUR2,637 million in revenue and EUR548 million in EBITDA
before special items.
=====================
N E T H E R L A N D S
=====================
BOELS TOPHOLDING: Moody's Cuts CFR to B1 & Alters Outlook to Stable
-------------------------------------------------------------------
Moody's Ratings has downgraded Boels Topholding B.V.'s (Boels or
the company) long-term corporate family rating to B1 from Ba3 and
probability of default rating to B1-PD from Ba3-PD. Concurrently,
Moody's downgraded the company's instrument ratings to B1 from Ba3
on the backed senior secured notes, the senior secured revolving
credit facility (RCF), and senior secured term loan B2 (TLB). The
outlook is changed to stable from negative.
RATINGS RATIONALE
The rating action reflects the limited prospects of credit metrics
improving to levels commensurate with a Ba3 rating over the next
18-24 months, due to a combination of material additional debt that
was raised to fund acquisitions in the past two years, as well as
softer market performance, particularly in the Nordics.
In 2024 the company raised close to EUR400 million of additional
debt to fund the acquisition of Riwal, which resulted in an
increase in Moody's adjusted leverage (gross debt/EBITDA) to 4x as
of 2024 from 3.6x in 2023. This was on top of around EUR200 million
raised in 2023 to diversify Boels' sources of funding and
strengthen liquidity. The step up in leverage is a deviation from
Moody's initial expectations and a sign of a financial policy that
tolerates prolonged deviation from management's internal target of
3.5x which is also above Moody's leverages threshold for the Ba3
rating.
Boels' organic operating performance in 2024 was slightly weaker
than Moody's previous expectations, with a 1% increase in revenue
and flat EBITDA due to challenging market conditions and the
construction market slowdown in the Nordics. This slowdown in
growth was offset by the contribution of Riwal's integration into
Boels, with Riwal performing in line with expectations. This
resulted in group consolidated revenue and EBITDA increasing by 12%
and 8%, respectively. The reported EBITDA margin for 2024 was
slightly lower at 34% compared to 35% in 2023 due to a lower margin
on Riwal's operations, as it is a specialist player with one type
of fleet offering.
Free cash flow (FCF) to debt was weak at -2.5% in 2024 and just
breakeven even after excluding growth capex and a one-off working
capital outflow, due to the implementation of timely payments to
suppliers. Moody's considers the FCF generation capacity of the
company to be weak despite the reduction of growth capex in this
market downturn.
There is a risk of future debt funded acquisitions though Moody's
don't expect them to be as large as Riwal. Nevertheless, this could
constrain the reduction in leverage over the medium term. In the
absence of further debt funded acquisitions, Moody's expects credit
metrics to recover to a Ba3 level only by 2027.
Moody's expects Boels will grow its revenue and EBITDA in the low
single digits in 2025 and 2026 on the back of a slight rebound in
the equipment rental market. As a result, Moody's projects Moody's
adjusted EBITDA at around EUR650-670 million during the period,
resulting in a Moody's adjusted gross leverage of around 3.8x-3.9x
in 2025 and 2026. Moody's forecasts that the company's FCF/debt
will turn slightly positive at around 1% in 2025 and 2026 due to
reduced capex.
ESG CONSIDERATIONS
Governance is a key consideration in this rating action to reflect
a financial policy that tolerates higher leverage beyond the
company's target leverage of 3.5x (company reported net debt/EBITDA
was at 4x in 2024), mostly due to sizeable debt funded
acquisitions.
OUTLOOK
The stable outlook reflects Moody's expectations that Boels will
continue to improve its operating performance such that Moody's
adjusted debt/EBITDA will decline towards 3.8x in the next 12-18
months. It also includes Moody's expectations for improved free
cash flow generation from FY2025 onwards after a period of elevated
levels of growth capex. Moody's assumes that the company will not
execute any additional major debt-funded acquisitions or
shareholder distributions.
LIQUIDITY
Moody's considers Boels' liquidity to be adequate, supported by a
cash balance of EUR44 million and an undrawn RCF of EUR250 million
as of December 31, 2024. Moody's expects that the company will
generate limited but positive FCF between EUR14 million and EUR21
million in 2025 and 2026. The nearest debt maturity is the EUR400
million notes and due in February 2029.
STRUCTURAL CONSIDERATIONS
The PDR is B1-PD, in line with the CFR, reflecting Moody's
assumptions of a 50% family recovery rate. The backed senior
secured notes, senior secured RCF, and senior secured TLB are all
pari passu and rated B1, in line with the CFR.
As part of the documentation, the Senior Facility Agreement (SFA)
contains a maintenance covenant based on net leverage set at 6.5x.
Moody's expects Boels to maintain ample headroom under this
covenant.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive pressure on the rating could occur if: (i)
Moody's-adjusted leverage declines below 3.5x on a sustainable
basis; (ii) liquidity is consistently good, with positive FCF/debt
approaching 20%; and (iii) its business profile continues to
improve through the successful integration of Riwal by increasing
market share, earnings, and diversification of end-market
exposure.
Negative pressure on the rating could occur if: (i) the company's
operational performance deteriorates; (ii) Moody's-adjusted
leverage remains above 4.5x on a sustained basis; or (iii) FCF is
consistently negative such that liquidity deteriorates.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Equipment and
Transportation Rental published in December 2024.
COMPANY PROFILE
Headquartered in the Netherlands, Boels is a leading European
provider of generalist and specialist rental equipment. Boels was
founded in 1977 by Pierre Boels Sr. His son, Pierre Boels Jr., has
been its Chief Executive Officer since 1996 and owns 100% of the
company. Pro forma for the full-year impact of Riwal, Boels
generated EUR1.9 billion of revenue and EUR626 million of Moody's
adjusted EBITDA in 2024.
=========
S P A I N
=========
HBX GROUP: S&P Assigns 'BB-' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned a 'BB-' issuer credit rating to the new
parent entity of the group, HBX Group International PLC, and a
'BB-' issue rating to its term loan B (TLB). At the same time, S&P
withdrew its ratings on HNVR Midco Ltd. and the fully refinanced
RCF that matured in 2026.
S&P said, "The stable outlook reflects our expectation that the
group will report revenues of around EUR750 million in 2025
compared to EUR693 million in 2024, while maintaining S&P Global
Ratings-adjusted EBITDA margins above 50%. Also, we anticipate
leverage will remain around 3.0x as management focuses on its
organic deleveraging efforts and we expect the group will maintain
an adequate liquidity buffer to manage its working capital
volatility."
The group started trading on the Spanish Stock Exchange on Feb. 13,
2025, under a new parent company HBX Group International PLC,
raising EUR725 million of primary proceeds, partly used to pay down
debt. The group, controlled by financial sponsors Cinven, CPPIB,
and EQT, approached the market to issue EUR725 million in new
shares and as well as a secondary offering of existing shares of up
to EUR135 million (EUR860 million in total transaction size). This
over-allotment option can be exercised up until March 14, 2025. At
an initial share price of EUR11.50, the implied market
capitalization was EUR2.84 billion and a total enterprise value of
close to EUR4 billion. The group used the primary proceeds to repay
EUR550 million of debt, as well as transaction costs of around
EUR80 million and incentive plans of about EUR200 million.
As part of the IPO process, the group has a new capital structure
with lower financial debt. This new structure comprises a five-year
EUR600 million TLA and a seven-year EUR600 million TLB as well as a
new EUR400 million RCF maturing in 2030. This has reduced its total
S&P Global Ratings-adjusted debt from EUR1.8 billion as of the end
of fiscal 2024 to EUR1.2 billion, currently. Consequently, its S&P
Global Ratings-adjusted leverage will drop from 4.9x in fiscal 2024
to an expected 3.1x by the end of fiscal 2025. Also, the
shareholders have exchanged EUR1.5 billion of shareholder loans for
common equity in the newly created entity, while redeeming EUR27
million of preference shares. The new capital structure gives the
group additional financial flexibility to support its growth
strategy while extending its debt maturity profile, as well as
reducing its overall interest bill, thereby improving the group’s
liquidity profile. S&P understands, in the medium term, management
intends to focus on the continuous organic deleveraging of the
group’s balance sheet to below the current S&P Global
Ratings-adjusted leverage of 3x.
S&P said, "While Cinven, CPPIB, and EQT remain the majority
shareholders of the group with close to 65% joint ownership, we
expect they will relinquish control over the medium term. We
continue to view the group as controlled by financial sponsors
given their majority ownership and control, though we expect the
sponsors will explore opportunities to continue to reduce their
exposure and realize their investment in the near term. We
understand from management and shareholders that capital allocation
will favor investment in the business, through organic investment
in enhancing capabilities and/or potential bolt-on acquisitions,
while maintaining leverage below the current S&P Global
Ratings-adjusted 3x.
"We expect the group will benefit from supportive industry trends
and a diversified hotel portfolio resulting in continued topline
growth. The travel sector has seen strong demand over the last
two-to-three years, since the pandemic, and we expect this to
continue, though at lower growth levels. We anticipate occupancies
will remain reasonably flat while average daily rates will
increase, though geographical differences are visible with the
Middle East and Asia largely being the growth drivers. We
anticipate this will translate into revenues of around EUR750
million in fiscal 2025 and close to EUR800 million in fiscal 2026,
up from EUR693 million in 2024. We expect the S&P Global
Ratings-adjusted EBITDA margin to remain around 52% in 2025 and
increase toward 53% in 2026. Earnings growth and limited capital
requirements should sustain strong free operating cash flow (FOCF)
generation of around EUR250 million in 2025 and up to EUR300
million in 2026, compared to EUR273 million in 2024.
"While HBX has established itself as a key player in B2B travel, we
think it remains exposed to potential competitive and macroeconomic
pressures and seasonality. HBX has successfully placed itself as a
key intermediary in the travel sector thanks to its independent
proposition, its strong relationships with suppliers (hotel
chains), and large investments in its technology platform. However,
the market remains highly fragmented with the largest player
(Expedia’s B2B division, part of the Expedia Group) holding only
5.9% of the market share, followed by HBX with 2.4%. While HBX’s
independence from any large B2C player enables it to have a
differentiated position in the market, we view barriers to entry
from larger players in the market as relatively low. Also, the
group is highly exposed to external factors such as geopolitical
disruptions, macroeconomic impacts on discretionary spending, and
even weather patterns, although geographical diversification acts
as a mitigant. In addition to this, the intrinsic seasonality of
the businesses exposes the group to working capital volatility,
which leads to a EUR300 million-EUR400 million intra year working
capital swing.
"The stable outlook reflects our expectation that the group will
continue to benefit from resilient travel demand and report
revenues above EUR750 million in fiscal 2025. We expect S&P Global
Ratings-adjusted EBITDA margins to remain above 50% and for this to
translate into strong cash flow generation, with FOCF at around
EUR250 million in fiscal 2025 and up to EUR300 million in fiscal
2026. Following the IPO and the new capital structure, we expect
leverage will remain at around 3.0x over the next 12-24 months in
line with management’s priorities. The outlook also encompasses
our view that the group will maintain an adequate liquidity buffer
to manage its working capital volatility.
"We could lower the rating in the next 12 months if the group
reported significant operational underperformance or if competitive
pressures and macroeconomic challenges were to weaken its credit
metrics. This could also stem from its financial policy being more
aggressive than we initially expected. Specifically, we could lower
the rating if the group's S&P Global Ratings-adjusted leverage were
to increase above 4x.
"We could consider an upgrade if the financial sponsors' stake
declines below 40%, pointing to a more diversified shareholding
base and structurally more conservative financial policy, while its
S&P Global Ratings-adjusted leverage remains well below 3x through
the working capital cycle. Rating upside would also hinge on the
group continuing to demonstrate sound operating performance,
resulting in strong margins and cash flow generation while
strengthening its competitive position."
===========================
U N I T E D K I N G D O M
===========================
INVENT LEARNING: Springfields Advisory Named as Administrators
--------------------------------------------------------------
Invent Learning Ltd was placed into administration proceedings in
the High Court of Justice Business and Property Courts in Leeds,
Court Number: CR2025LDS000224, and Situl Devji Raithatha of
Springfields Advisory LLP were appointed as administrators on March
4, 2025.
Invent Learning engaged in education support services.
Its registered office and principal trading address is at 30 King
Street, Whetstone, Leicester, LE8 6LS.
The joint administrators can be reached at:
Situl Devji Raithatha
Springfields Advisory LLP
38 De Montfort Street
Leicester, LE1 7GS
Tel No: 0116 299 4745
For further details, contact:
Sachin Raithatha
Springfields Advisory LLP
38 De Montfort Street
Leicester LE1 7GS
Tel No: 0116 299 475
Email: sachin.r@springfields-uk.com
JH COMMERCIAL: 360 Insolvency Named as Administrators
-----------------------------------------------------
JH Commercial Catering Services Ltd was placed into administration
proceedings in the High Court of Justice Business and Property
Courts of England and Wales Insolvency and Companies CHD, Court
Number: CR-2025-001532, and Dane O'Hara of 360 Insolvency was
appointed as administrators on March 6, 2025.
JH Commercial is in the banking business.
Its registered office and principal trading address is at 174
Frindsbury Hill, Rochester, Kent, ME2 4JR.
The joint administrators can be reached at:
Dane O'Hara
360 Insolvency
Joiner's Shop
The Historic Dockyard
Chatham, Kent, ME4 4TZ
For further details, contact:
The Administrator
Email: info@360insolvency.co.uk
Alternative contact: Hannah Gardner
MOVE TECHNOLOGIES: KR8 Advisory Named as Administrators
-------------------------------------------------------
Move Technologies Limited was placed into administration
proceedings in the High Court of Justice Business and Property
Courts of England and Wales, Insolvency and Companies List (Chd),
Court Number: CR-2025-001444, and James Saunders and Michael Lennon
of KR8 Advisory Limited were appointed as administrators on March
4, 2025.
Move Technologies engaged in business and domestic software
development.
Its registered office is c/o KR8 Advisory Limited, at The Lexicon,
10-12 Mount Street, Manchester, M2 5NT.
Its principal trading address is at Steward House 2nd Floor,
Commercial Way, Woking, Surrey, England, GU21 6EN.
The joint administrators can be reached at:
James Saunders
Michael Lennon
KR8 Advisory Limited
The Lexicon, 10 - 12 Mount Street
Manchester, M2 5NT
For further details, please contact:
The Joint Administrators
Email: Matthew.dunnill@kr8.co.uk
*********
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,
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