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260101.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, January 1, 2026, Vol. 27, No. 1 Headlines F R A N C E EUROPCAR MOBILITY: Moody's Affirms B3 CFR, Alters Outlook to Stable K A Z A K H S T A N HOME CREDIT BANK: Fitch Affirms 'BB-' LongTerm IDRs L U X E M B O U R G AI PLEX: Fitch Affirms 'B-' LongTerm IDR, Alters Outlook to Stable S P A I N KAIXO BONDCO: Fitch Puts BB+ Unsecured Debt Rating on Watch Pos. S W E D E N HEIMSTADEN AB: Fitch Affirms B- LongTerm IDR, Outlook Negative HEIMSTADEN BOSTAD: Fitch Affirms 'BB' Subordinated Debt Rating S W I T Z E R L A N D APTIV SWISS: Fitch Affirms 'BB+' Rating on Jr. Subordinated Debt T U R K E Y DFS FUNDING: Fitch Affirms BB+ Rating on 9 Tranches of 2025-A Debt U N I T E D K I N G D O M AZULE ENERGY: Fitch Affirms 'B+' LongTerm Foreign Currency IDR DECHRA TOPCO: Fitch Alters Outlook on B+ LongTerm IDR to Negative PETROFAC LIMITED: Fitch Affirms and Withdraws 'D' IDRs WE SODA: Fitch Lowers LongTerm IDR to 'B+' - - - - - =========== F R A N C E =========== EUROPCAR MOBILITY: Moody's Affirms B3 CFR, Alters Outlook to Stable ------------------------------------------------------------------- Moody's Ratings has affirmed Europcar Mobility Group S.A.'s (Europcar or the company) B3 corporate family rating, its B3-PD probability of default rating and affirmed the B1 rating on the backed senior secured notes (the fleet notes) due in October 2026 issued by EC Finance plc. The outlook for both entities changed to stable, from negative. "The rating action reflects Moody's expectations that Europcar's turnaround plan initiated in 2025 will gradually improve credit metrics over the next few years, and that Volkswagen Aktiengesellschaft (VW, Baa1 stable) is likely to continue providing support to the company, as demonstrated since its investment in 2022," says Sarah Nicolini, Moody's Ratings Vice President-Senior Analyst and lead analyst for Europcar. RATINGS RATIONALE Europcar's B3 CFR and its stable outlook are supported by its market leadership in the European car rental market, holding either first or second market share position in every country where it operates, and its ability to adjust the fleet size due to the flexibility provided by the buyback agreements. The rating is also underpinned by VW's commitment to the joint mobility strategy and by Moody's expectations that VW will likely continue to demonstrate its financial support to the company. This is reflected by the EUR500 million term loan that VW granted in 2022 and the recent EUR400 million shareholder loan granted in 2025. Moody's also acknowledge the presence of call and put options related to Attestor Limited's stake in Europcar, which, if exercised, could increase VW's ownership in the company to 93% by mid 2027. For these reasons, governance considerations, in particular related to financial strategy and risk management, were material to the rating and the key driver under Moody's ESG framework. Moody's anticipates that the company will progressively increase its operating profit over the next 12-18 months, supported by a gradual reduction in operating costs and increases in revenue per rental day. As a result, Moody's expects Moody's-adjusted EBIT margin to trend towards 5% over the next 12-18 months, compared with 0.4% in 2024 and negative 1.7% in the 12 months ended June 2025. Consequently, Moody's anticipates that credit metrics will gradually improve, with Moody's-adjusted debt/EBITDA reducing towards 4x by 2026, compared with 4.1x in 2024 and 4.4x in June 2025. Similarly, Moody's forecasts that Moody's-adjusted EBIT/interest will increase towards 1x, compared to -0.3x in the 12 months ended June 2025, while Moody's-adjusted free cash flow (FCF) will remain around breakeven. Despite improving, credit metrics will continue to weakly position Europcar within the B3 rating. The B3 rating is also constrained by the execution risks related to the turnaround plan, considering the intense competition in the car rental market; the company's constrained liquidity and its ongoing dependence on external funding; its higher-than-historical share of vehicles bought outside of buyback agreements, which creates residual value risk. LIQUIDITY Europcar's liquidity remains constrained due to upcoming debt maturities in 2026. The company had EUR321 million cash and equivalent as of June 2025, of which around EUR68 million were unrestricted and sitting at operating companies (notably in non-euro-currency countries) to fund day-to-day operations and capital spending. This cash at operating companies could be used by Europcar to service its corporate debt under certain conditions. In June 2025, Europcar had EUR232 million available under the committed revolver credit facility, which totals around EUR343 million and matures in August 2027. The revolver is subject to a financial maintenance covenant that requires cash flow coverage to remain above 1.1x. Moody's expects a limited buffer to comply with the covenant over the next 12-18 months. Moody's forecasts that the company's negative FCF will progressively reduce over the next 12-18 months, eventually turning positive. This will still leave the company dependent on external funding. The company will need to repay EUR110 million of state-guaranteed loans by June 2026 and EUR500 million related to the fleet bond maturing in October 2026. Thereafter, in 2027, the company will need to refinance the revolver, which matures in August, and to reimburse the EUR500 million VW's term loan and the EUR250 million VW's shareholder loan currently drawn (out of a total EUR400 million granted), in November and December, respectively. The rating assumes that the company will maintain access to external financing and that VW will continue to provide funding, if needed. STRUCTURAL CONSIDERATIONS The fleet notes are rated B1, two notches above the CFR, as they have a second priority ranking below the senior asset revolving facility (SARF), and benefit from the pledges of some fleet assets and receivables under buyback agreements. The SARF and the fleet notes are subject to a quarterly loan-to-value (LTV) maintenance test of a maximum of 95%. The fleet notes, the SARF and other fleet financing facilities do not have a claim on the operating businesses. The fleet notes benefit from guarantees by Europcar International S.A.S.U. and Europcar Mobility Group S.A. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectations that Europcar's turnaround plan will be successfully implemented and that the company will maintain access to external funding, including additional support from VW. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on the rating could manifest if the company demonstrates significant and durable improvements in operating performance and profitability, leading to a sustainably positive Moody's-adjusted free cash flow (FCF) and a Moody's-adjusted EBIT/interest increasing above 1.3x. The company would also need to improve its liquidity to at least adequate. An upgrade would also require Moody's-adjusted pretax income margin to increase above 2% and its Moody's-adjusted debt/ EBITDA to decline well below 4.5x, both on a sustained basis. Positive rating pressure could also arise in case the call and put options related to Attestor Limited's stake are exercised, as this would result in a significant increase in VW's ownership, therefore increasing likelihood of support provision. Negative pressure on the rating could develop if the company is unable to recover its operating performance, resulting in prolonged subdued profitability. Negative pressure could also manifest if Europcar's Moody's-adjusted FCF remains negative, its Moody's-adjusted EBIT/interest remains below 1x, or its liquidity does not improve. The rating could also be downgraded if the company loses access to external funding. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Equipment and Transportation Rental published in October 2025. Europcar's B3 CFR is two notches below the scorecard-indicated outcome to incorporate the company's constrained liquidity and its ongoing dependance on external funding. COMPANY PROFILE Headquartered in Paris, France, Europcar Mobility Group S.A. (Europcar) is the European leader in car rental services, providing short- to medium-term rentals of passenger vehicles and light trucks to corporate, leisure and replacement clients. It generated total revenue of around EUR3.4 billion in the last 12 months ended June 2025. Since July 2022, the company has been owned by a consortium composed of VW, Attestor Limited and Pon Holdings B.V. VW alone owns 66% of Europcar's share capital. =================== K A Z A K H S T A N =================== HOME CREDIT BANK: Fitch Affirms 'BB-' LongTerm IDRs --------------------------------------------------- Fitch Ratings has affirmed JSC Home Credit Bank's (HCBK) Long-Term (LT) Foreign-Currency (FC) and Local-Currency (LC) Issuer Default Ratings (IDRs) at 'BB-'. The Outlooks are Stable. Fitch has also affirmed the bank's Viability Rating (VR) at 'bb-', the National LT Rating at 'BBB+(kaz)', and assigned a Shareholder Support Rating (SSR) of 'bb-'. The assignment of the 'bb-' SSR follows the completion, on 25 November 2025, of ForteBank JSC's (Forte; BB/Stable) acquisition of a controlling stake in HCBK, increasing its ownership to 75% from 25%. Fitch expects Forte to become the sole shareholder of HCBK, with the remaining 25% equity stake to be acquired until end-2025. Fitch has withdrawn HCBK's Government Support Rating of 'no support' as the bank has undergone reorganisation resulting from an ownership change. Fitch expects that potential extraordinary support for HCBK would likely come from its new controlling shareholder. Key Rating Drivers HCBK's LT IDRs are driven by its 'bb-' VR and underpinned by potential support from Forte, as reflected by HCBK's 'bb-' SSR. The VR captures its limited and niche franchise in retail lending, which could translate into volatile asset quality through the credit cycle and the bank's weaker funding profile than domestic peers'. The VR also incorporates HCBK's reasonable capitalisation and robust profitability. HCBK's National LT Rating of 'BBB+(kaz)' reflects the bank's creditworthiness relative to other issuers in Kazakhstan. High Inflation, Tightened Retail Regulations: Kazakhstan's GDP grew by 4.8% in 2024, and Fitch expects economic growth to remain robust in 2025-2026 due to high oil production and solid investment. Headline inflation is likely to be 12%-13% in 2025 (2024: 9%) and decline only modestly to about 10% in 2026, with upside risks from tax reforms, regulated-price adjustments and quasi-fiscal stimulus. Rapid retail lending expansion since 2021 has created overheating risks, while the continued regulatory tightening decelerates growth and mitigates credit risk. Niche Retail Franchise: HCBK is a small bank, with a 1.8% share of sector assets as of November 1, 2025, specialising in unsecured retail lending and planning to diversify into the SME segment. The bank's large exposure to high-risk assets is offset by wide margins on its lending products. Fitch said, "We expect HCBK to benefit from cross-selling business opportunities and potentially lower funding costs under Forte. Rapid Loan Growth: "Loan growth slowed to 29% in 2024 (2023: 44%) but exceeded the 24% sector average in the retail segment. In 9M25, loan growth remained rapid 22%, and we expect it to remain high in 2026. While a portion of funding is in FC, all retail lending is in LC, and the bank closes its FC on-balance-sheet position through liquidity placements. We expect the bank to retain its risk-management framework post-acquisition," Fitch said. Well-Priced Asset-Quality Risks: The impaired loans ratio remained a high 10.9% at end-3Q25 (end-2024: 11.3%). Total reserve coverage was a modest 44% at end-3Q25 (end-2024: 47%), partly due to conservative loan-classification policy (33% of Stage 3 loans were non-overdue). Impaired loan origination was 6% in 9M25, driving the cost of risk above the sector average (4.1%), but it is well covered by pre-impairment operating profit (11.3%). This indicates credit risks are adequately priced. Fitch expects the impaired loans ratio to remain high in 2026. Strong Profitability: HCBK's net interest margin was wide, but reduced to 17.5% in 9M25 (annualised; 2024: 18.4%) due to higher funding costs. Despite margin pressures, the bank's annualised operating profit improved to 4.6% of risk-weighted assets (RWAs) in 9M25 (2024: 4%), supported by stable operating efficiency and lower loan impairment charges. Fitch expects the bank's operating profit/RWAs ratio of above 4% in 2026. Reasonable Capitalisation: The bank's Fitch Core Capital (FCC) ratio has hovered around an adequate 15% since end-2023 (end-3Q25: 15.1%). Fitch's assessment of HCBK's capitalisation captures strong profitability, high RWA density (end-3Q25: 110%) and its medium-term growth plans. Fitch expects the FCC ratio to remain broadly stable in 2026, but its projection does not factor in potential changes to the bank's dividend policy under the new shareholder. Wholesale Funding, Adequate Liquidity: Wholesale funding made up a notable 33% of liabilities at end-3Q25 (end-2024: 32%), driving a high loans/deposits ratio of 151% (end-2024: 142%), significantly above the 84% sector average. In combination with reliance on term deposits (end-3Q25: 54% of liabilities), this results in the highest funding costs among peers (9M25: 13.8%; annualised). The liquidity buffer (end-3Q25: 18% of assets) fully covered wholesale debt repayments due in 4Q25-2026. Moderate Probability of Shareholder Support: HCBK's 'bb-' SSR reflects its significant role within Forte, the parent's high reputational risk in a subsidiary's default and moderate binding commitments. The one-notch gap with Forte's LT FC IDR captures the subsidiary's material size relative to Forte. As of 1 November 2025, HCBK's size was equivalent to 25% of Forte's assets and 44% of its equity, making any potential support considerable for the parent. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of HCBK's LT IDRs would require a downgrade of its VR and SSR. A downgrade of the SSR would be triggered by a downgrade of Forte's LT IDRs. The VR would be downgraded on a material and sustained weakening of the bank's profitability, due to either a sharp increase in the cost of risk or a margin squeeze. A weakening of the bank's FCC ratio to below 10% or of its tangible leverage ratio to below 12%, due to the combination of rapid RWA growth and bulky dividend payments, could also result in a downgrade. HCBK's National Rating will be downgraded if the bank's creditworthiness deteriorates relative to other issuers in Kazakhstan. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of HCBK's Long-Term IDR could come from an upgrade of the bank's VR or SSR. An upgrade of the SSR would be triggered by an upgrade of Forte's LT IDRs. The VR upgrade would require a more diversified business model, with considerable improvements in its risk profile and asset quality. The VR upgrade would also require strengthening of the bank's funding profile, with lower reliance on non-deposit funding. HCBK's National Rating will be upgraded if the bank's creditworthiness improves relative to other issuers in Kazakhstan. RATING ACTIONS Rating Prior ------ ----- JSC Home Credit Bank LT IDR BB- Affirmed BB- ST IDR B Affirmed B LC LT IDR BB- Affirmed BB- LC ST IDR B Affirmed B Natl LT BBB+(kaz) Affirmed BBB+(kaz) Viability bb- Affirmed bb- Gov't Support WD Withdrawn ns Shareholder Support bb- New Rating =================== L U X E M B O U R G =================== AI PLEX: Fitch Affirms 'B-' LongTerm IDR, Alters Outlook to Stable ------------------------------------------------------------------ Fitch Ratings has revised AI Plex (Luxembourg) S.a r.l.'s (Roehm) Outlook to Stable from Negative and affirmed the 'B-' Long-Term Issuer Default Rating (IDR). Fitch has also affirmed Roehm Holding GmbH's and Roehm US Holding LLC's term loans at senior secured 'B-'. The Recovery Rating is 'RR4'. The revision of the Outlook follows Roehm's refinancing of its EUR170 million debt, extending its maturity to January 2029 from July 2026, and the progress made in ramping up production at its new LiMA plant in the US. Fitch also expects cash flows from the new plant to turn Roehm free cash flow (FCF) positive from 2026. Roehm's rating is constrained by still high leverage, cash flow volatility driven by methyl methacrylate (MMA) prices, and cyclical demand in key end-industries, such as construction or automotive. Key Rating Drivers Refinancing Positive: Roehm recently refinanced its euro- and US dollar-denominated term loan payments due July 2026 with a EUR170 million facility due January 2029. The transaction has removed short-term refinancing risk and underpins the Outlook revision to Stable. The new facility is priced at EURIBOR+700bp with a 95.5 issue price. Concurrently, shareholders injected EUR93 million of equity to repay a USD100 million vendor loan from SABIC, reducing leverage. Progress with LiMA: Roehm announced that its Bay City (Texas) LiMA plant had reached around 75% production capacity as of November 2025. The plant is operating three out of four reactors at nameplate capacity and is expected to reach full production in 1Q26, leading to broader market supply. Fitch does not factor in EBITDA contribution from the plant in 2025, but it understand from management that cash flow contributions will become more meaningful from 2026 as the plant is fully ramped up. MMA Prices Depressed: MMA prices remained depressed in 3Q25 and Fitch only expects a gradual improvement in market conditions in spite of some production capacity reductions. However, Fitch expects Roehm's cash flows will improve considerably from 2026 on the back of higher production capacity in the US. Lower Capex: Fitch said, "We expect annual capex to decline sharply to around EUR80 million from 2026, after completing the investment in the new plant, from EUR500 million in 2023 and 2024. Our forecasts do not assume any dividend payments, as shareholders prioritise deleveraging. Reduced investments and the absence of shareholder distributions should lead to gradual deleveraging and neutral to positive FCF." Deleveraging Expected: Fitch said, "We continue to forecast that Roehm's EBITDA gross leverage will decline to 6.4x in 2027 - below the 7.5x negative rating sensitivity - on the back cash flows from the new LiMA plant and a gradual improvement in market conditions. The gradual reduction in leverage supports the rating and Stable Outlook." Western Leader: Roehm's merchant leadership in Europe and the US has strengthened following plant closures by competitors, making it the only MMA producer in Europe. Low-cost production from Roehm's new LiMA plant should enable the company to gain market share in the US while remaining competitive against Asian supply. Cyclical Business: Roehm's focus on the production of chemical commodities exposes it to cyclical end-markets, such as the construction and automotive sectors. Fitch views MMA prices as the main driver of Roehm's profitability. The main MMA applications are in construction and lighting, with the automotive sector being particularly high-margin for Roehm. Volatility is mitigated by Roehm's vertical integration into downstream MMA derivatives. This supports high operational utilisation of its upstream assets and stabilises margin given the specialisation of products. Peer Analysis Roehm's closest EMEA chemical peers are Petkim Petrokimya Holdings A.S. (CCC) and Root Bidco S.a.r.l. (B-/Stable). Roehm benefits from a stronger operating profile than Petkim, which has higher asset concentration and weaker end-market diversification. Root Bidco operates in resilient agricultural markets with higher margins and product diversification, differentiating its risk profile from Roehm's more cyclical exposure. Fitch's Key Rating-Case Assumptions - Volumes sold to rise to 820,000 tonnes in 2027, from about 660,000 tonnes in 2025 - EBITDA margin to increase to an average 15% in 2026-2028, from about 7% in 2025, due primarily to contribution by LiMA - Annual capex broadly in line with management guidance - No dividends in 2025-2028 Recovery Analysis The recovery analysis assumes that Roehm would be reorganised as a going concern in bankruptcy rather than liquidated. Fitch said, "We estimate going-concern EBITDA after restructuring at EUR270 million, reflecting significant capacity additions in core markets and limited demand driving narrower MMA spreads for a prolonged period. "We used a distressed enterprise value multiple of 4.5x, which reflects the company's modest scale, market position and growth prospects. "We expect EUR90 million of factoring to be replaced by an equivalent super-senior facility. We also assume its EUR300 million revolving credit facility is fully drawn. "Our waterfall analysis, after deducting 10% for administrative claims, generated a waterfall-generated recovery computation in the 'RR4' band, indicating a 'B-' senior secured rating." RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Worsened liquidity resulting from financial and/or operational underperformance - EBITDA gross leverage above 7.5x for a sustained period - EBITDA interest coverage below 1.25x on a sustained basis - EBITDA margin materially below 15% and negative FCF generation on a sustained basis Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage below 6x for a sustained period - EBITDA interest coverage above 2.5x on a sustained basis - Contribution to cash flows from the LiMA plant largely in line with plan Liquidity and Debt Structure As of end-September 2025, Roehm had readily available cash of about EUR90 million and undrawn revolving credit facilities of EUR145 million maturing in July 2028 (excluding EUR35 million that expires in January 2026). In 4Q25 Roehm increased its revolving credit facility by EUR20 million and refinanced its term loan B of around EUR155 million due in July 2026 with a tap issue of EUR170 million. The sponsor Advent provided a EUR93 million equity injection to support the repayment of the vendor loan, along with the abovementioned tap. Fitch expects Roehm to generate negative FCF of around EUR200 million in 2025 before it turns neutral to positive from 2026 as LiMA fully ramp ups. Issuer Profile Roehm is a vertically integrated manufacturer of MMA and its derivatives. It has production capacity for 910,000 tonnes of MMA across its plants in Germany, the US and China. Summary of Financial Adjustments - Debt issuance transaction cost of EUR16.3 million of added back to the debt balance - The following items were excluded from EBITDA: EUR6.1 million share of profit from equity-accounted investees, EUR7.1 million M&A costs, EUR4.2 million retention costs, EUR2.6 million loss on disposal of assets, and EUR1 million impairment loss and EUR13 million of insurance compensation ========= S P A I N ========= KAIXO BONDCO: Fitch Puts BB+ Unsecured Debt Rating on Watch Pos. ---------------------------------------------------------------- Fitch Ratings has placed Masorange Holdco Limited's Long-Term Issuer Default Rating (IDR) of 'BBB-' and Short-Term IDR of 'F3' on Rating Watch Positive (RWP). Fitch has also placed Masorange Finco Plc and Lorca Telecom Bondco S.A.U.'s senior secured instrument ratings, and Kaixo Bondco Telecom S.A.U.'s senior unsecured instrument ratings on RWP. The RWP follows a binding agreement under which Orange S.A. (BBB+/Stable), which owns 50% of MasOrange, will acquire Lorca's remaining 50% stake, giving Orange full control. It reflects a prospective change in rating approach and at least a one-notch uplift from MasOrange's standalone credit profile (SCP) due to linkage to a stronger parent, in line with Fitch's Parent and Subsidiary Linkage Criteria (PSL criteria). Fitch expects to resolve the RWP once the transaction completes, which Orange considers likely to occur in 1H26, subject to regulatory approvals and other closing conditions. Key Rating Drivers Parent and Subsidiary Linkage, Notching: Fitch will apply its PSL criteria following completion of the transaction and Orange S.A.'s full ownership of MasOrange, assessing the strength of linkage between the two via the stronger-parent path. This is likely to result in a rating that is one notch higher than MasOrange's SCP of 'BBB-' absent any legal incentives to support MasOrange. High Strategic Incentives: Fitch said, "We view Orange's strategic incentives to support MasOrange in distress as 'high'. With full asset ownership, Spain would become Orange's second-largest market after France, contributing about 17% of revenue and around 20% of operating cash flow (EBITDA after leases minus capex) in 2026. Consolidating MasOrange would increase Orange's mature-market revenue exposure and reduce the Middle East and Africa share of operating cash flow to roughly 24% in 2026 from about 29% in 2024." Low to Medium Operational Incentives: Fitch said, "We assess Orange's operational incentives to support MasOrange in distress as low to medium. This reflects Fitch's view of operational synergies as low and management/brand overlap as medium. Fitch sees limited cross-border synergies in telecoms, supporting the low assessment for operational synergies. MasOrange and Orange share certain brands and management expertise, which underpins the medium assessment for management and brand overlap." RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA net leverage consistently above 3.2x - CFO less capex consistently at or below 10% of gross debt - Failure to deliver integration and synergy benefits in line with Fitch's rating case resulting in a detrimental impact on planned margin and cash flow expansion - Intensification of competitive pressures leading to deterioration in operational performance Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Fitch expects to resolve the RWP once the transaction is complete. Fitch will likely apply one-notch uplift from MasOrange's SCP assuming Fitch assesses PSL legal incentives as low. Independent of the Transaction: - EBITDA net leverage consistently below 2.7x - CFO less capex consistently at or above 12% of gross debt - Financial policy in line with a higher rating and proven commitment to consistently meeting stated policy - Senior secured net leverage consistently declining to 2.5x or below, which would lead to the senior unsecured debt rating being aligned with the Long-Term IDR Issuer Profile MasOrange is the second-largest telecom operator in Spain by revenues and the largest by subscriber market share. It was formed in 1H24 through an Orange Spain and MasMovil merger. It is co-controlled by both parties with equal governance rights. RATING ACTIONS Rating Prior ------ ----- Masorange Holdco Limited LT IDR BBB- Rating Watch On BBB- ST IDR F3 Rating Watch On F3 Masorange Finco Plc senior secured LT BBB Rating Watch On BBB Lorca Telecom Bondco S.A.U. senior secured LT BBB Rating Watch On BBB Kaixo Bondco Telecom S.A.U. senior unsecured LT BB+ Rating Watch On BB+ =========== S W E D E N =========== HEIMSTADEN AB: Fitch Affirms B- LongTerm IDR, Outlook Negative -------------------------------------------------------------- Fitch Ratings has affirmed Heimstaden AB's Long-Term Issuer Default Rating (IDR) at 'B-', with a Negative Outlook. Its senior unsecured rating is affirmed at 'B'/RR3. The two 2025 bond refinancings have lengthened the company's debt maturities to 2028, 2030 and 2031 and built-up cash reserves to service unsecured bonds while Heimstaden Bostad's (IDR: BBB-/Stable) dividends have ceased. With existing resources, Fitch calculates the next liquidity crunch-point is mid-2028. Subordinated hybrids and preference shares continue to accrue their coupons payable. Fitch assumes that Heimstaden Bostad has the capacity to pay a cash dividend in 2027. The Negative Outlook reflects Heimstaden AB's reliance on its finite cash resources to service unsecured bonds until its main equity stake in Heimstaden Bostad AB restores regular cash dividends. Ultimate recovery of monetising some or all of the Heimstaden Bostad equity holding ensures high recovery prospects for unsecured bondholders. Key Rating Drivers Debt Maturities Restart in 2028: After 2025's two sets of bond refinancings and 1Q25 Danish asset disposal receipts, Heimstaden AB's three main unsecured bonds have maturity dates of July 2028 (SEK750 million), January 2030 (equivalent SEK4.75 billion) and January 2031 (equivalent SEK4.4 billion). On a standalone basis, Heimstaden AB will rely on its cash (end-3Q25: SEK1.47 billion) and about SEK0.3 billion of annual management fee profit net of operating costs to service about SEK0.8 billion of annual cash gross interest on the unsecured bonds. Two subordinated hybrids with SEK7.8 billion outstanding are accruing their coupons. Heimstaden AB's cash is enough to service unsecured debt until the next main bond maturity, in July 2028. The company needs to maintain a minimum 1x liquidity ratio (12-month forward-looking) to comply with its bond covenants. Without proceeds from property disposals (planned for 1H27) it may be in breach when the covenant calculation captures the July 2028 bond maturity. Ultimate Monetisation: Unsecured creditors are reliant on monetisation (in full or in part) of Heimstaden AB's 36.7% (end-3Q25) equity stake in Heimstaden Bostad and the resumption of dividends. The attributable value of this equity stake at end-3Q25 is SEK49.6 billion, relative to Heimstaden AB's SEK9.9 billion of unsecured bonds. This does not include cash and the realisation of its remaining investment and development properties, or their secured debt. Distant Resumption of Dividend: Heimstaden Bostad's decision not to declare a dividend in 2023 and 2024 (which would be payable in 2024 and 2025, respectively) helps to preserve its investment grade ratings. In its rating case for Heimstaden Bostad, Fitch assumes that it may declare a dividend based on 2026's results and payable in 2027. If cash dividends are resumed, the accrued amount of about SEK1.8 billion (an end-3Q25 figure) on Heimstaden AB-held class A shares will be paid first followed by any declared dividends on its class B and common shares. Shareholders' Agreement: The dividend payment is subject to shareholder voting, with management's main priority to conserve financial headroom so that it meets Heimstaden Bostad's financial policy metrics, including its company-calculated interest coverage of 1.8x. Although Alecta, a main shareholder, has called the shareholders' agreement imbalanced, other institutional investors have not voiced the same concerns. Preserving Heimstaden Bostad's Rating: Heimstaden Bostad stopped paying dividends and actioned a sizeable privatisation disposal plan to help protect its 'BBB-' ratings. The company's financial profile is hampered by regulated residential rent, with inflation-linked increases phased over multiple years relative to more immediate interest expense rises. Its assets are valued at a 3.71% net initial yield (3Q25), relative to its cost of debt of 3.3%, at a Fitch-calculated loan-to-value of about 60%. Lower leverage, helped by privatisation disposal receipts and measured interest rate cost increases, has alleviated pressure on its tight interest cover (Fitch 2025 forecast: 1.6x). Remaining Property Sales Planned: Heimstaden AB's residential development in Denmark is due to be sold in 1Q27 upon completion with proceeds repaying its attached development loan and two properties in Sweden (a school and an occupied office) which it plans to sell and repay attached secured debt. Net proceeds planned for 1H27 have a range of SEK0.5 billion-0.7 billion, which can help Heimstaden AB's liquidity profile if Heimstaden Bostad does not resume the payment of dividends. Enhancing Heimstaden AB's Profile: Similarly, as the group's founding holding company, the suspension of dividends from Heimstaden Bostad helps protect Heimstaden AB's equity investment in the subsidiary. Correspondingly, the latter has deferred coupon payments on its hybrids, its preference shares and its own dividends, and sold assets to manage interim liquidity. IHC Criteria Approach: Fitch rates Heimstaden AB using its Investment Holding Companies (IHC) Rating Criteria, reflecting reliance on its main subsidiary's dividends, its own finite liquidity and its key asset (the equity stake in Heimstaden Bostad) to help mitigate refinancing risk. No Notching Effect from Shareholder: Fitch has not factored in financial support from Fredensborg AS, Heimstaden AB's main shareholder. In the past, the former has provided liquidity support to Heimstaden AB by Fredensborg 32 AS bringing forward the 1Q25's Danish developments' disposal receipts and, similarly, Iceland residential asset disposal receipts in 2023. Peer Analysis There are no relevant, publicly rated real estate holding company peers that to compare to Heimstaden AB. Fitch's Key Rating-Case Assumptions - No further cash dividends from Heimstaden Bostad, until possibly 2027. Management fees net of Heimstaden AB's operational expenses, results in EBITDA of about SEK0.3 billion in 2026. - Continued deferral of interest under its Swedish krona- and euro-denominated hybrids, and its preference shares. - Net disposal proceeds of SEK0.5 billion-0.7 billion from the Danish and Swedish investment and development properties planned for 1H27. - In the Recovery Rating calculations, Fitch uses end-3Q25's Heimstaden Bostad's adjusted net asset value (from the published accounts) of SEK49.6 billion, representing Heimstaden AB's 36.7% equity stake in Heimstaden Bostad (before any form of dilution). Recovery Analysis Under Fitch's Recovery Ratings criteria, senior unsecured debt is rated the same as the IDR, capped at 'RR4' to reflect the lower predictability of recovery prospects. Given the high recovery estimate (despite potential dilution and/or discounts in value) and the predictability and stability of residential-for-rent rents and values, Fitch has applied a criteria variation to rate Heimstaden AB's senior unsecured rating one notch above the IDR at 'B', with an 'RR3'. Under Fitch's hybrid criteria, the activated deferral of interest makes the Swedish krona- and euro-denominated hybrids non-performing. Fitch rates the hybrids 'CCC', reflecting that loss absorption has been triggered, although the instrument is expected to return to performing status with only very low economic losses. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Twelve-month liquidity score below 1.0x and failing to address the July 2028 bond maturity 12 months in advance - Cessation of asset management fee (0.2% of Heimstaden Bostad's gross asset value) that is not routed through dividends - Use of existing cash for non-debt service purposes Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Restoration of dividends on cash-pay preference A, preference B and common shares - Heimstaden AB's standalone EBITDA, including restored cash dividends/cash interest expense (including hybrids), coverage above 1.0x Liquidity and Debt Structure Heimstaden AB's cash at 3Q25 was SEK1,470 million after bond refinancings in January and July 2025, and receipt of asset sale proceeds in 1Q25. These resources are enough to cover its senior cash-paid interest costs until the SEK750 million unsecured bond maturity in July 2028, assuming continued subordinated hybrid coupon deferrals. To maintain compliance with bond covenants, it needs to keep a minimum 1x liquidity ratio (12-month forward-looking). With net receipts from three remaining investment and development property sales planned for 1H27, there is sufficient cash past 2028, including the repayment of that year's SEK750 million debt maturity. Fitch calculates that the forward-looking bond covenant could be potentially breached after payment of the main bonds' annual interest during 1Q28, when the ratio measures remaining cash relative to the 1Q29 interest payable. Thereafter, unsecured bond maturities are January 2030 (SEK4.7 billion) and 2031 (SEK4.4 billion). The SEK and EUR subordinated hybrids totaling SEK-equivalent 7.7 billion have had their coupons deferred since 1Q24 and 1Q25, respectively. With little net profit from management fees and minimal recurrent rental income, Heimstaden AB is reliant on finite cash to service 2026 and 2027 gross interest expense of SEK0.8 billion a year. Criteria Variation Criteria Variation on Senior Unsecured Recovery Rating: The Recovery Criteria guide senior debt to be the same as the IDR, with a Recovery Rating capped at 'RR4' to reflect the lower predictability of recovery prospects. Given the high recovery estimate detailed above and the predictability and stability of residential-for-rent (some regulated) rents and values, Fitch has applied a criteria variation to rate Heimstaden AB's senior unsecured debt one notch above the IDR at 'B', with a 'RR3' recovery estimate. RATING ACTIONS Rating Prior ------ ----- Heimstaden AB LT IDR B- Affirmed B- subordinated LT CCC Affirmed RR6 CCC senior unsecured LT B Affirmed RR3 B HEIMSTADEN BOSTAD: Fitch Affirms 'BB' Subordinated Debt Rating -------------------------------------------------------------- Fitch Ratings has affirmed Heimstaden Bostad AB's Long-Term Issuer Default Rating (IDR) and senior unsecured rating at 'BBB-'. The Outlook is Stable. Heimstaden Bostad's ratings reflect the benefits of a large geographically diversified residential-for-rent portfolio, of which about 60% rent is generated from regulated markets. Rental growth remains strong due to asset quality and good locations. Its financial profile reflects the low income-yield (3Q25: 3.7%) of its assets and a typical 65% EBITDA margin, relative to the group's cost of debt that is currently at about 3.3% and rising. Income stability and interest rate hedging support a prospective minimum stable interest cover of 1.6x. Active treasury management refinances an average SEK25 billion of debt a year from 2027 onwards. Management's actions include diverting net proceeds from successful privatisation disposals to deleveraging, mitigating rising interest expenses and reducing secured funding. Fitch assumes Heimstaden Bostad has the capacity to declare a dividend payable in 2027. Key Rating Drivers Rental Growth: The portfolio's net rent rose 5% on a like-for-like (lfl) basis averaging the three quarters to end-3Q25 and 3.3% after disposals. Of this, the regulated market German portfolio (25% by end-3Q25 value) averaged 4.8% lfl rent increases, reflecting the Berlin- and Hamburg-weighted higher quality assets operating under the Mietspiegel mechanism that phases in the 2022's CPI spike. The regulated Swedish portfolio (28%) averaged a 5.7% equivalent rise as the rent framework - in negotiation with tenant associations - recovers past CPI more quickly. Denmark (21%), which has a lower share of regulated rental income, also outperformed CPI for the period at 3.2%. As expected, the non-regulated portfolios of Czechia (9% by value) and the UK (fledgling 2%) saw higher rent increases. Generally, these annual rent increases are likely to be generally lower in 2026, which will still outperform peers due to the wider portfolio's better locations and generally higher asset quality. Benefits of Diversified Portfolio: The SEK327 billion portfolio is diversified and split roughly 60:40 across regulated and non-regulated rent markets. The latter respond more quickly to CPI and wage growth while regulated rent increases are phased for affordability. As a result, the gap between in-place and market rents is widening. Management had targeted markets with healthy private-owner activity, which proved advantageous when the privatisation disposal programme was implemented. The portfolio has maintained high occupancy (3Q25: 98.6%), improved profitability, and benefits from re-letting units that, at tenant churn, have yielded an 8%-10% incremental rental yield on reinvestment capex. Affordability is less of an issue in locations with a growing population of city workers. Solid Growth Prospects: The 3.71% net initial yield at end-3Q25 remains low relative to other real estate asset types, reflecting future rental growth and inherently stable rents, for this necessity-based residential-for-rent asset class. Many countries' supply constraints and increased demand (given urbanisation and immigration growth) also point to real rent and valuation growth prospects. Higher construction costs and cost of capital mean residential new-builds need higher rent or subsidies to promote new construction. Meanwhile, existing stock benefits from these market conditions. Privatisation Disposal Proceeds: The privatisation disposals raised SEK16.6 billion at end-3Q25 versus a SEK20 billion two-year target by end-2025. Fewer units were sold, but at higher values. Disposals have focussed on Denmark, the Netherlands and Norway housing markets. Volumes in 2025 averaged around SEK2.5 billion gross proceeds a quarter. The secured debt attached to sold units was prepaid, related taxes paid or reserved, profit margins were around 27% above book value. Units sold were valued as regulated rent units, then sold to a regulated-rent investor or private owner. Net proceeds were used to prepay group debt. Continued Disposal Programme: The privatisation disposal programme will continue into 2026. Separately, SEK5 billion of residential portfolio disposals took place in 12 months to end-3Q25. Focus on Interest Coverage: Heimstaden Bostad accessed the bond markets to refinance some of its expensive debt (some secured bank debt) and maintained the group's average cost of debt at 3.3%. Revolving credit facilities (RCFs) have been extended. Prepayment of debt with disposal proceeds should reduce net debt/EBITDA to 17x at end-2025 (2024: 19.6x). Fitch forecasts net interest coverage to rise to 1.6x in 2025 (2024: 1.4x). Fitch's net interest cover calculation does not include 'profits' from assets sales and includes 100% hybrid interest expense that will increase significantly to 6% by end-2027. No Dividends for 2024 and 2025: Heimstaden Bostad has not declared a dividend for 2023 or 2024 and is unlikely to declare one for 2025. The company wants to achieve its financial policy metrics, particularly the company-calculated interest cover of 1.8x (equivalent Fitch-calculated 1.6x). Fitch assumes that, as the privatisation programme continues, a dividend may be declared based on 2026's results and be paid in cash in 2027. Heimstaden Bostad is likely to accumulate cash resources to remunerate shareholders. Disgruntled Shareholder: The shareholder Alecta (38.6% capital share) who is under the Swedish financial regulator's scrutiny for its Heimstaden Bostad and its US regional banks exposure, has voiced its intention to reduce its holding (by 12%) by "at least SEK6 billion, when market conditions allow". Alecta's criticism of Heimstaden Bostad mainly cites the shareholders' agreement, which it considers to be imbalanced. Other Swedish pension institutional investors representing the other 25.2% of Heimstaden Bostad's end-2024 capital share (not owned by Heimstaden AB) have not added to this opinion. Peer Analysis Heimstaden Bostad's portfolio of EUR29.7 billion and 158,317 residential-for-rent units at end-3Q25 was materially larger than Grainger plc's (BBB-/Stable; EUR4.2 billion; 10,924 units); Peach Property Group AG (B/Stable; EUR1.9 billion), which is mainly focused in Germany's North Rhine-Westphalia region; and D.V.I. Deutsche Vermoegens- und Immobilienverwaltungs GmbH (BBB-/Stable; Berlin-focused EUR2.3 billion, mainly residential). The German-weighted portfolio of Vonovia SE (BBB+/Stable) is larger at EUR82 billion with 539,753 units. Heimstaden Bostad's 2024 lfl rental growth was 5.3% compared with Vonovia's 3.7%, with both companies' Swedish portfolios averaging around 5.5% for 3Q25. Their German portfolios are markedly different with Vonovia's more widespread domestic portfolio capturing lower quality portfolios, compared with Heimstaden Bostad's quality-end Berlin and Hamburg-specific portfolios. DVI's equivalent 2024 lfl rent rise was around 4% with little tenant improvement capex. Grainger's equivalent year to end-September 2025 was a subdued 3.4%. All companies have high occupancy. The geographical diversification of Heimstaden Bostad's European portfolio is wider than peers', balancing city-specific conditions such as Berlin's rent regulation, exposure to different countries' economies and rental regulations. The net initial yields (NIYs) on residential-for-rent are lower compared with commercial real estate, reflecting their lower risk, stable rental income, and conducive supply and demand dynamics. Fitch acknowledges the higher debt capacity of residential-for-rent assets compared with more volatile commercial real estate (office, retail, industrial). Heimstaden Bostad's net debt/EBITDA of 19.6x at end-2024 is comparable to that of investment-grade peers, such as Vonovia (around 17x), DVI (residential-based measure; end-2024: 17.7x), and the development-burdened, less-regulated, portfolio of Grainger (end-September 2025: 16x). For some companies, tightening interest coverage is constraining their debt capacity. Fitch's Key Rating-Case Assumptions - Net rents averaging 2.5% year-on-year growth during 2025-2028. Annual net rental growth averages 5.4%, excluding the adverse effect of ongoing privatisation disposals but including the beneficial effect of tenant improvement capex on units - Eurozone variable rates use the 2% eurozone policy rate from Fitch's Global Economic Outlook (September 2025). New fixed-rate bonds assumed at 4%. Hybrids' scheduled coupon resets to 6%-7% - Capex at SEK5 billion a year during 2026-2028, yielding gross rent of 7.5% (this is a blend of tenant improvement capex at double-digit yields and lower yield for maintenance expenditure) - Disposals, including ongoing privatisation disposals, average SEK10.5 billion a year during 2025-2028 - Cash dividends are paid in 2027 including the accrued dividend for the Class A shares to Heimstaden AB RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Net debt/EBITDA above 22x - EBITDA net interest cover remaining below 1.4x - Changes to the governance structure that loosen the ring-fencing around Heimstaden Bostad - A 12-month liquidity score approaching 1.0x - For the senior unsecured debt rating: failure to improve the unencumbered investment property assets/unsecured debt cover towards 1.5x by end-2025 (end-2025F: 1.7x; end-2026F: 1.9x) Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Successful progress with the privatisation disposal programme - Liquidity score above 1.25x for the first 12 months and above 1.0x for the subsequent nine to 12 months - Net debt/EBITDA below 21x - EBITDA net interest cover above 1.6x Liquidity and Debt Structure The company had cash of SEK3 billion at end-3Q25, including the benefit of September 2025's EUR500 million 3.75% coupon bond, privatisation disposal proceeds, lighter capex and no dividends. At end-3Q35, RCFs totalled SEK25.7 billion (of which SEK19 billion remained available) with their maturity dates starting from mid-2027. The debt maturity profile totals SEK10.4 billion in 2026. The group's debt maturity profile until 2031 is around SEK22 billion-25 billion a year and 2027's liquidity profile is 1x, without extensions of existing RCFs. Fitch calculates the 2024 average cost of debt at 3.3% (including hybrids' interest expense at 100%). The average debt maturity was some 7.7 years at end-3Q25 (end-2023: eight years) excluding the permanent hybrids. The average interest rate maturity was a short 3.25 years at end-3Q25: (end-3Q24: 3.24 years) and 87% of debt had fixed or hedged interest rates. The unencumbered investment property/unsecured debt cover improved to above 1.4x at end-2024, following repayment of secured debt with unsecured bond proceeds. Heimstaden Bostad intends to improve this further towards 1.9x by end-2026 (2025F: 1.7x) as bonds replace secured funding and privatisation receipts reduce secured RCF drawings. Currently, 61% of the debt stack is secured (mortgages and RCFs). RATING ACTIONS Rating Prior ------ ----- Heimstaden Bostad AB LT IDR BBB- Affirmed BBB- senior unsecured LT BBB- Affirmed BBB- subordinated LT BB Affirmed BB Heimstaden Bostad Treasury B.V. senior unsecured LT BBB- Affirmed BBB- ===================== S W I T Z E R L A N D ===================== APTIV SWISS: Fitch Affirms 'BB+' Rating on Jr. Subordinated Debt ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BBB' Long-Term Issuer Default Ratings (IDRs) of Aptiv PLC, Aptiv Swiss Holdings Limited, and Aptiv LLC (collectively, Aptiv). Fitch has also affirmed Aptiv's senior unsecured rating at 'BBB' and junior subordinated rating at 'BB+'. Fitch has removed the ratings from Rating Watch Negative and assigned a Stable Outlook. Aptiv's ratings reflect Fitch's expectation that the company will generate strong EBITDA and FCF margins following the planned spin-off of its Electrical Distribution Systems (EDS) business, with a post-spin business profile increasingly in line with that of an industrial technology company. The ratings are also supported by the substantial debt reduction achieved in the past year, and by further debt reduction expected following the EDS spin-off. Key Rating Drivers EDS Spin-Off Progressing: The planned spin-off of the EDS business continues to move forward, with completion planned in 1Q26. The spin-off will create two separate companies with differing business profiles. Aptiv will remain an industrial technology business with a focus on leading edge automotive technologies, such as advanced driver assistance systems (ADAS) and software-defined vehicles (SDVs), as well as technologically complex engineered components for use in harsh environments. Post-spin, Aptiv will have an increasing proportion of its revenue derived from outside the auto industry. Fitch expects the standalone EDS business, focused on low voltage (LV) and high voltage (HV) vehicle electrical- architecture systems, to have good growth prospects, but at a lower rate than post-spin Aptiv. EDS has lower margins than Aptiv's other businesses, which will meaningfully increase Aptiv's margins after the spin-off. Business Profile Supports Higher Leverage; Although Aptiv will generate stronger margins and have a higher growth profile following the spin-off, Fitch estimates the spin-off will reduce Aptiv's EBITDA by over 25%. This decline will result in gross EBITDA leverage running in the 2.0x-2.5x range over the longer term, even as the company uses proceeds from the planned EDS dividend to reduce a commensurate amount of debt. However, the company can support higher leverage at the 'BBB' level, with EBITDA margins approaching 20% and FCF margins in the 10% range. Post-spin, Aptiv will also be more diversified, with non-automotive revenue comprising nearly a quarter of its revenue at the time of the spin and growing over the intermediate term. Among the Fitch-rated universe of diversified industrials, EBITDA leverage of 2.5x is generally commensurate with a 'BBB' rating. Tariff Effects: Tariffs have had a limited direct effect on Aptiv in 2025. The company produces most of its products for the U.S. market from plants in North America, and these products are largely compliant with the U.S.-Mexico-Canada (USMCA) trade agreement, and are not currently subject to tariffs. Indirectly, Aptiv is exposed to potential vehicle production volatility from tariffs affecting the broader U.S. auto industry, but recent policy changes are likely to further support U.S. auto production over the intermediate term. Aptiv also has a good track record managing other trade-related issues, like supply shortages and export restrictions. Solid Product Demand: Excluding EDS, Aptiv has recorded about $65 billion of cumulative new-business bookings since the start of 2022, with slightly more than half in its Intelligent Systems (IS) business and the rest in its Engineered Components Group (ECG). Post-spin, Aptiv's automotive revenue will be focused on important growth areas, such as electrification, advanced driver assistance systems (ADAS) and software-defined vehicle (SDV) architectures. Outside of automotive, Aptiv will have a growing presence in the commercial vehicle, industrial, aerospace and defense and telecom industries. Strong Platform Mix: Aptiv's automotive revenue and bookings are heavily tied to top vehicle platforms. In North America, over three-quarters of its bookings since the beginning of 2024 are related to truck and SUV platforms, while in Europe, more than half of its bookings have been tied to the top 25 vehicle platforms in the region. In China, Aptiv has been successfully shifting from its historical customer base of Western OEMs to local Chinese OEMs, with more than 65% of its recent bookings in the country coming from local OEMs. 10% FCF Margins: Fitch expects Aptiv's post-spin FCF margins (according to Fitch's methodology) to run in the 9%-10.5% range over the next several years. This assumes that capex as a percentage of revenue runs at about 4.0% following the separation, which is in line with historical levels. It also assumes that Aptiv does not reinstate a common dividend following the separation. Aptiv's decision to reward shareholders via share buybacks, rather than dividends, has helped to support its FCF under Fitch's methodology. Parent/Subsidiary Linkage: Fitch rates the Long-Term IDRs of Aptiv, Aptiv Swiss Holdings and Aptiv LLC on a consolidated basis using the stronger subsidiary approach, with open access and control factors. The assessment is based on the parent and subsidiaries operating as a single enterprise with strong legal and operational ties, as well as upstream and downstream guarantees. Peer Analysis Aptiv has a strong competitive position, focusing on automotive technologies that are rising in importance as safety regulations, emissions regulations, and customer demand drive growth in ADAS, connectivity and electrified propulsion systems. Compared with more traditional auto suppliers, such as BorgWarner Inc. (BBB+/Stable) or Lear Corporation (BBB/Stable), Aptiv is essentially an industrial technology company that is focused largely on autos. It also has a growing presence in other industries, such as aerospace and telecommunications. However, some large global suppliers compete head-to-head with Aptiv in automotive technologies, including Continental AG (BBB/Positive), ZF Friedrichshafen AG, Visteon Corporation and Lear. All four have units focused on similar automotive technologies. Aptiv's margins are strong relative to most of the global Fitch-rated auto suppliers due to the company's focus on high value-added technologies and its low-cost production footprint. However, it is more mid-pack in terms of size, with less than half the revenue of the largest players, such as Continental, Magna International Inc. or Robert Bosch GmbH (A/Negative). Aptiv's credit metrics are in line with auto suppliers rated in the 'BBB' category, such as BorgWarner and Lear. Fitch’s Key Rating-Case Assumptions -- Aptiv completes the spin-off of the EDS business by 1Q26; -- Global light vehicle production in Aptiv's markets is flat in 2025, then rises in the low single-digit range in subsequent years; -- Aptiv's revenue, excluding EDS, grows in the mid-single-digit range over the next several years, reflecting solid growth over the market due to its advanced vehicle technologies and further growth in its non-automotive business; -- EBITDA margins, excluding EDS, are in the high teens in 2025, then approach the low-20% range in subsequent years as the company benefits from a higher margin product portfolio, increased production levels and cost-savings benefits; -- Tariff costs borne by the company are passed through to customers; -- FCF margins, excluding EDS, run in the high single-digit range over the long term; -- Capex runs at about 4.0% of revenue over the next several years; -- Aptiv uses proceeds from the EDS spin-off to repay debt; -- The company maintains a strong liquidity position, including cash and revolver capacity; -- Excess cash is applied primarily to share repurchases. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade -- A shift in industry dynamics that leads to a meaningful loss of share the products that Aptiv will retain post-spin; -- A shift in financial policy suggesting the company will operate with sustained gross EBITDA leverage above 2.5x following the separation; -- A change in the business profile that leads to sustained midcycle EBITDA margins below 12% and FCF margins below 2.0%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade -- A shift in financial policy that leads to a sustained decrease in midcycle EBITDA leverage below 2.0x; -- Maintaining midcycle EBITDA margins of 17% and FCF margins above 4.0% while continuing to grow its advanced technology portfolio. Liquidity and Debt Structure Fitch expects Aptiv's liquidity will remain strong over the intermediate term. Aptiv had $1.6 billion of unrestricted cash and cash equivalents at Sept. 30, 2025. In addition, Aptiv had nearly full availability on its $2.0 billion revolver, with no borrowings and only $1.0 million in letters of credit issued against it. The revolver matures in 2030. Based on the company's recent performance, Fitch has treated $95 million of Aptiv's cash as not readily available as of Sept. 30, 2025. This is Fitch's estimate of the amount of cash Aptiv needs to maintain to cover seasonal changes in cash flow without any incremental borrowing. The principal value of Aptiv's consolidated debt as of Sept. 30, 2025, was $7.5 billion, after applying 50% equity credit to the company's junior subordinated notes and excluding finance leases. Debt consisted primarily of $7.2 billion of senior unsecured notes, $500 million of junior subordinated notes (that Fitch treats as $250 million after applying 50% equity credit) and $10 million of other debt (excluding estimated finance leases). Issuer Profile Aptiv is an industrial technology supplier focused primarily on autos industry. Aptiv's ECG segment produces interconnect and component solutions for applications across multiple end markets. The IS segment provides components and software related to vehicle safety and convenience. RATING ACTIONS Rating Prior ------ ----- Aptiv LLC LT IDR BBB Affirmed BBB senior unsecured LT BBB Affirmed BBB Aptiv Swiss Holdings Limited LT IDR BBB Affirmed BBB senior unsecured LT BBB Affirmed BBB junior subordinated LT BB+ Affirmed BB+ Aptiv PLC LT IDR BBB Affirmed BBB =========== T U R K E Y =========== DFS FUNDING: Fitch Affirms BB+ Rating on 9 Tranches of 2025-A Debt ------------------------------------------------------------------ Fitch Ratings has assigned DFS Funding Corp's Series 2025-A, B, C, D, F, I, J and K notes final ratings of 'BB+', with Outlook Stable. Fitch has also affirmed the nine outstanding series at 'BB+'. RATING ACTIONS Rating Prior ------ ----- DFS Funding Corp. Series 2021-F KYMM0035HV80 LT BB+ Affirmed BB+ Series 2023-A LT BB+ Affirmed BB+ Series 2023-B LT BB+ Affirmed BB+ Series 2023-C LT BB+ Affirmed BB+ Series 2023-D LT BB+ Affirmed BB+ Series 2023-E LT BB+ Affirmed BB+ Series 2023-F LT BB+ Affirmed BB+ Series 2023-G LT BB+ Affirmed BB+ Series 2023-H LT BB+ Affirmed BB+ Series 2025-A LT BB+ New Rating Series 2025-B LT BB+ New Rating Series 2025-C LT BB+ New Rating Series 2025-D LT BB+ New Rating Series 2025-F LT BB+ New Rating Series 2025-I LT BB+ New Rating Series 2025-J LT BB+ New Rating Series 2025-K LT BB+ New Rating PreviousPage Transaction Summary The diversified payment rights (DPR) programme is a financial future flow securitisation backed by the originating bank's (Denizbank A.S.) generation of foreign-currency flows (denominated in US dollars, euros and sterling). Collateral consists of the bank's existing and future rights to receive foreign currency payments into its accounts with correspondent banks abroad. DPRs can arise for a variety of reasons including payments due on the export of goods and services, capital flows, tourism and personal remittances. KEY RATING DRIVERS Originator Credit Quality: Denizbank's 'BB-' Long-Term Local-Currency Issuer Default Rating (LC IDR) is higher than its Viability Rating of 'b+'. This reflects institutional support due to the bank's strategic importance to its parent, Emirates NBD Bank PJSC (A+/Stable). The Stable Outlook on Denizbank's LC IDR mirrors that on the Turkish sovereign. Denizbank had unconsolidated assets of USD40.8 billion and deposits of USD23.5 billion at September 2025, representing 4.2% and 4.1% of total system assets and system deposits, respectively, according to the Banks Association of Turkiye. GCA Score Allows Rating Uplift: Fitch has a Going Concern Assessment (GCA) of 'GC2' on Denizbank. This reflects the support to Denizbank from its parent and Denizbank's importance to the Turkish banking system as the sixth-largest privately owned bank in Turkiye. Fitch credits the DPR programme with a two-notch uplift from Denizbank's LC IDR, due to the quality and diversity of its flows, the resulting debt service coverage and the size of the programme relative to the bank's other liabilities. Relatively Low Coverage Levels: Historically both total and non-Turkish flows have been volatile. Fitch calculated the debt service coverage ratio (DSCR) at 36x of the maximum quarterly debt service based on the monthly average offshore flows processed through designated depository banks (DDBs) in the last 12 months and 23x based on the lowest monthly flows in the past five years. The DSCR based on the last 12 months' flows is lower than other DPR programmes rated by Fitch. However, compared with peers, the flows are granular and diverse, and Fitch sees less concentration relative to the largest beneficiaries, large size transactions and flows processed via the largest DDBs . Diversion Risk Reduced: The programme's structure, like those of peers, mitigates certain sovereign risks by keeping DPR flows offshore, allowing the programme to be rated above Turkiye's IDR and Country Ceiling of 'BB-'. Fitch believes diversion risk is materially reduced by the acknowledgement agreements signed by nine DDBs. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The most significant variables affecting the programme's ratings are the originator's credit quality, the GCA score, the DPR flows, the DSCRs and the relative programme size. Fitch said, "We would analyse a change in any of these variables for the impact on the ratings. The last variable is measured through the level of future flow debt as a percentage of the bank's overall liability profile, its non-deposit funding and long-term funding. This is factored into Fitch's analysis to determine the notching differential, given the GCA score." In addition, the ratings of The Bank of New York Mellon, as the transaction account bank, would constrain the ratings of DPR debt if they were below those of the DPR debt and no remedial action was taken. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The main constraint on the DPR rating is the originator's credit quality and its operating environment. Positive action on the originator's Long-Term LC IDR could contribute positively to the DPR rating. Improvements in economic conditions could also contribute positively to DPR flow performance and the ratings. =========================== U N I T E D K I N G D O M =========================== AZULE ENERGY: Fitch Affirms 'B+' LongTerm Foreign Currency IDR -------------------------------------------------------------- Fitch Ratings has affirmed Azule Energy Holdings Limited's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. Fitch has also affirmed Azule Energy Finance Plc's senior unsecured 'B+' rating with a Recovery Rating of 'RR4'. The rating reflects Azule Energy's weak operating environment in Angola (B-/Stable), balanced against its medium-size oil and gas production, long reserve life, strong financial profile and supportive shareholding structure as a joint venture between BP plc (A+/Stable) and Eni SpA (A-/Stable). Fitch said, "We rate the company two notches above Angola's 'B-' Country Ceiling due to strong offshore features, including sales proceeds being collected in a UK bank and retained there, resulting in high debt service coverage." Key Rating Drivers Good Progress with New Projects: Azule Energy achieved first oil from the Agogo Floating Production, Storage, and Offloading (FPSO) in July 2025, with early start-up driving 3Q production to 212 thousand barrels of oil equivalent per day (kboe/d). Agogo is ramping up, to currently around 50 kboe/d, with drilling continuing through 2026-2027 toward projected gross peak production from two FPSOs of 175 kboe/d. The New Gas Consortium (NGC) project achieved first gas in November 2025, six months ahead of schedule; it is Angola's first non-associated gas development with a 400 million cubic feet per day (mscf/d) gas and 20 thousand barrels per day condensate capacity. It is currently in testing and not yet in commercial operation, with EBITDA contribution expected in 2026. Focus on Production Growth: Azule will ramp up Agogo and commission the NGC project, targeting oil and gas output of around 240 kboe/d in 2026, versus 203 kboe/d in 9M25. The company has guided capex to remain broadly in line with 2025 at USD1.5 billion-2 billion, with continued efforts to reduce operating costs. Fitch said, "We understand from management that Azule is working on an updated business plan. We assume that key pillars of the business and financial strategy will be maintained." Scale, Low Leverage Support Ratings: Azule Energy's credit profile is supported by its scale of operations, good operational record, the strong credit position of oil offtakers, healthy liquidity and low leverage. Key rating constraints are a lack of geographical diversification and Angola's weak operating environment. Sales to Partners: Azule Energy markets its oil through long-term offtake contracts expiring in 2029 with BP Oil International Limited (BPOI) and Eni Trade & Biofuels S.p.A (ETB), which are trading arms of BP and Eni, respectively. The oil pricing is aligned with market conditions and based on Brent crude. The strong credit profiles of Azule Energy's offtakers is positive for the credit profile. Strong Offshore Enhancements: Azule's export revenues are deposited into Standard Chartered Bank in the UK. A portion of the proceeds is directed to the pre-export facility debt service account held at the bank, where Azule Energy must maintain debt service for the next six months. The rest are transferred to Azule Energy's central account at Standard Chartered. In Angola, the company only retains the cash necessary to cover current payments to employees and contractors. High Debt Service Coverage: Angola does not have repatriation requirements for export revenues held abroad. Consequently, Fitch calculated a debt service coverage ratio taking 50% of export EBITDA, cash held abroad and a revolving credit facility for 2025 against upcoming principal and interest payments. The calculated ratio was well above 1.5x in 2025-2027, resulting in the rating being two notches above Angola's Country Ceiling. Peer Analysis Azule Energy's closest peers include Ithaca Energy plc (BB-/Stable) and Energean plc (BB-/Stable). As a joint venture between BP and Eni, Azule Energy distinguishes itself as a leading oil and gas producer in Angola, with production of 212kboe/d in 2024, significantly surpassing Ithaca's approximately 105kboe/d and Energean's 153kboe/d. Azule Energy's 2024 production was mostly oil-based. Energean is primarily focused on Israel and has a strong gas-weighted production profile backed by substantial long-term contracts, despite limited geographic diversification. Its competitive production costs and focus on Israeli assets improve cash flow visibility. However, geopolitical risks and evolving dividend policies create uncertainties. Ithaca's rating reflects its growing scale and operational diversification, low leverage, and conservative financial policy. These strengths are counterbalanced by a short proved reserve life relative to peers', asset concentration in the UK Continental Shelf (UKCS) with high operating costs and a less predictable, high tax regime. Fitch's Key Rating-Case Assumptions -- Oil and gas price assumptions in line with Fitch's price deck -- Consolidated oil and gas production rising to around 240kboe/d by 2026 -- Capex in line with management's guidance -- Dividend payments averaging USD870 million a year during 2025- 2028 Recovery Analysis - The recovery analysis assumes that Azule Energy would be a going concern (GC) in bankruptcy and that the company would be reorganised rather than liquidated - A 10% administrative claim - A GC EBITDA estimate of USD1.5 billion reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which Fitch bases the valuation of the company - An enterprise value multiple of 4x - Taking into account Fitch's Country-Specific Treatment of Recovery Ratings Criteria, Fitch's waterfall analysis generated a waterfall-generated recovery computation in the 'RR4' band, indicating a 'B+' senior unsecured rating. The Recovery Rating for corporate issuers in Angola is capped at 'RR4' RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downward revision of Angola's Country Ceiling - An increase in EBITDA net leverage to above 3.5x on a sustained basis Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upward revision of Angola's Country Ceiling, coupled with EBITDA net leverage below 2.5x and debt service coverage well above 1.5x on a sustained basis Liquidity and Debt Structure Azule Energy's cash balance at end-September 2025 of USD877 million covered short -term debt of USD797 million. It also has USD500 million available under its revolving credit facility maturing in April 2026, which it plans to extend. Azule Energy's main debt is a pre-export facility with an outstanding balance of USD2.3 billion at end-September 2025. The facility has a steep amortisation schedule, but Azule Energy proactively manages its upcoming debt maturities. Issuer Profile Azule Energy is a JV between BP and Eni with a portfolio across eight offshore producing blocks in Angola and a 27.2% stake in Angola LNG. DECHRA TOPCO: Fitch Alters Outlook on B+ LongTerm IDR to Negative ----------------------------------------------------------------- Fitch Ratings has revised Dechra Topco Limited's Outlook to Negative from Stable, while affirming its Long-Term Issuer Default Rating (IDR) at 'B+'. Fitch has also affirmed Dechra Finance US LLC's and Dechra Pharmaceuticals Holdings Limited's senior secured debt issuance ratings at 'BB-', with a Recovery Rating of 'RR3'. The Negative Outlook reflects Fitch's expectation of negative cash flow generation (FCF) in FY26 (end-June) and neutral in FY27, following increased exceptional expenses and investment guidance. Fitch said, "While we expect exceptionals to greatly reduce by FY27, we expect the investment guidance to remain heightened for a longer period, which results in low-to-mid single-digits FCF margins, a decline from our previous expectations of high single-digits." The 'B+' IDR reflects the company's modest size versus global pharmaceuticals and high but improving leverage with a robust business profile and diversified portfolio in high-growth market of specialty therapeutics for companion animals. This will lead to mid-to-high single-digit sales growth and improving EBITDA and FCF margins through the rating case, which should result in steady deleveraging. Key Rating Drivers Depressed FCF: The Negative Outlook is driven by the announced increased investments in one-time costs related to business transformation, and the structurally higher development costs expected in the innovative platform. This should result in a negative FCF generation in FY26 and mildly positive in FY27. The change is a represents a deviation from Fitch's mid-to-high single-digits FCF margins expectations in Fitch's latest review, which reduces rating headroom under the 'B+' IDR. Fitch said, "We continue to exclude investments in the innovative platform from EBITDA, as they are long-term and could transform Dechra into a more innovative company. However, they weigh in on FCF generation and the large increase in investments reflects a diminished financial flexibility should any setbacks or underperformance occur." Profitable Growth Trajectory: Fitch said, "We forecast Dechra's revenue to rise at a mid-to-high single-digit rate, driven by product launches and improved pricing and product mix. This should result in EBITDA margin expansion to about 27% by FY29, aided by new products being structurally more profitable and salesforce initiatives implemented over the next two years." Fitch said, "We expect the growth to be fully organic within the next two years, as Dechra increases its investments in long-term products. Any inorganic expansion after FY27 will require careful selection of treatments or technology that complements its current portfolio and pipeline." Deleveraging Capacity: Fitch said, "The EBITDA expansion in our view will reduce EBITDA leverage towards 5.7x in FY26 from 6.8x the previous year. The deleveraging trajectory will depend on careful execution of the growth plan on new product launches and the success of the salesforce initiatives, risks that we view as meaningful but manageable, coupled with a prudent financial policy. Our 'B+' IDR is predicated on Dechra returning to EBITDA leverage of below 5.5x after 2O26, evidencing the low rating headroom under the rating in combination with the low FCF that informs our Negative Outlook." Robust, Mid-Size Business Model: The ratings reflect that Dechra's robust business model remains underpinned by its well-diversified product portfolio across therapeutic areas and species, a balanced geographic footprint in the US and Europe, as well as entrenched market positions in the niche areas of companion animal healthcare. This is reflected in Dechra's ability to deliver healthy organic sales growth and solid operating margins. This is balanced by its mid-size scale, with revenues expected to remain below GBP1 billion before FY28. Supportive Market Fundamentals: Dechra benefits from long-term demand for animal health products and market consolidation. The market has seen mid-to-high single-digit growth, due to rising consumer spending on companion animals and greater animal health awareness shifting its focus from cure to prevention. Companion animal pharma companies are better protected from competition, with generic pharma peers likely to experience smaller market share loss and slower price erosion on patent expiry than in human pharma. Peer Analysis Fitch rates Dechra under its Global Ratings Navigator for Pharmaceutical Companies. Fitch compares Dechra with other animal pharma companies, like Financière Top Mendel SAS (Ceva Sante; B+/Stable). Although the former focuses on the companion animal subsector that has inherently higher growth rates, Ceva Sante's market position in the poultry market allows it to expand consistently at mid-to-high single-digit rate with slightly higher profitability and similar leverage levels. Dechra is rated lower than Elanco Animal Health Incorporated (BB/Stable), reflecting its smaller scale, lower diversification and higher leverage. Pharma companies in the 'B' rating category in Fitch's portfolio are normally small, generic business with concentrated product portfolios and leveraged balance sheets. Compared with asset-light business, like CHEPLAPHARM Arzneimittel GmbH (B/Stable) and ADVANZ PHARMA HoldCo Limited (B/Stable), Dechra's lower margins are balanced by a greater geographic reach, slower price erosion on patent expiry and higher growth prospects supporting a faster deleveraging trajectory, resulting in a one-notch rating difference. Fitch's Key Rating-Case Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - High single-digit growth in FY26, driven by improved pricing and the launches of new products. Fitch expects revenue growth to remain in the high-to-mid single-digits for FY27-FY29 - EBITDA margin of 25% in FY25, steadily trending to about 27% by FY29 - Capex of 5% of revenue in FY26 and remaining close to 4% to FY29; the calculation includes milestone payments - No acquisitions in FY26-FY27, as the company focuses on long-term pipeline investments (acquisitions of GBP60 million in FY28-FY29) - Divestments proceeds of GBP25 million from Med-Pharmex facility in FY26 - No dividend payouts in FY25-FY28 Recovery Analysis The recovery analysis assumes that Dechra would be restructured as a going concern rather than liquidated in a default given its brand, quality of product portfolio and established global market position. Fitch estimates Dechra would have post-reorganisation going concern EBITDA of about GBP175 million, with potential distress most likely resulting from product contamination or similar compliance issues, or disruptions at wholesalers due to distributor concentration. A distressed enterprise value/EBITDA multiple of 6.5x has been applied to calculate a going concern enterprise value. This multiple reflects the group's strong organic growth potential, high underlying profitability and protected niche market positions with some in-house innovation capabilities. After deducting 10% for administrative claims, Fitch's principal waterfall analysis generated a ranked recovery in the 'RR3' band for the senior secured capital structure, comprising its term loan B (TLB) and a GBP215 million senior revolving credit facility, which Fitch assumes will be fully drawn prior to distress in accordance with its methodology. Fitch's waterfall analysis generates ranked recovery for the senior secured debt in the 'RR3' band, indicating a 'BB-' instrument rating for the secured debt, one notch above the IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA leverage consistently above 5.5x - Evidence of weaker operating performance or slower-than-expected new product ramp-ups leading to EBITDA margins below 25% on a consistent basis - FCF margins trending toward neutral - EBITDA interest coverage consistently below 2.5x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade is not envisaged unless the group's business matures and its innovation strategy is successfully implemented, leading to better diversification and larger scale with EBITDA above GBP500 million - EBITDA leverage consistently below 4.5x - FCF margins consistently at mid-to-high single digits - EBITDA interest coverage consistently above 3.5x Liquidity and Debt Structure As of 1Q26, Dechra has about GBP135 million available in cash, which should cover its investment requirements. Furthermore, the company has not drawn at any point from its GBP215 million revolving credit facility. Fitch's analysis is supported by its long-term maturities to 2032. Issuer Profile Dechra is a UK-based manufacturer and distributor of animal healthcare pharmaceutical products, mostly in Europe and North America. PETROFAC LIMITED: Fitch Affirms and Withdraws 'D' IDRs ------------------------------------------------------ Fitch Ratings has affirmed Petrofac Limited's Long- and Short-Term Issuer Default Ratings at 'D' and its senior secured debt rating at 'C'. The Recovery Rating is 'RR5'. Fitch has subsequently withdrawn all the ratings. Petrofac's ratings reflect its self-administration insolvency proceeding initiated on October 27, 2025. Fitch has withdrawn the ratings of Petrofac due to the company's bankruptcy, debt restructuring or default following its application to the administration process, in line with its criteria. Fitch will no longer provide ratings for or analytical coverage on Petrofac. Key Rating Drivers Insolvency Procedure Continues: Petrofac is continuing its operations under the supervision of the court-appointed insolvency administrator effective from October 28, 2025. The company still faces an uncured default on interest payments for its USD600 million senior secured notes which will be addressed in the administration process. Peer Analysis Not applicable as the rating has been withdrawn Fitch's Key Rating-Case Assumptions Not applicable as the rating has been withdrawn Recovery Analysis The recovery analysis assumes that Petrofac would still be reorganised as a going concern in bankruptcy rather than liquidated primarily due to its assets solutions business. Fitch assumed that the overall debt of USD845 million to comprise USD600 million senior secured notes, its USD127 million revolving credit facility (with full drawdown), USD71 million term loans and remaining unpaid accrued interest. Fitch assumed that all debt instruments rank equally. Fitch's going-concern EBITDA of USD50 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA on which Fitch bases the enterprise valuation. Fitch applied a distressed EBITDA multiple of 4x to calculate a going concern enterprise value. The choice of multiple mainly reflects Petrofac's market position being offset by weak revenue visibility and demand volatility in the oil and gas markets. Fitch's waterfall analysis, after deducting 10% for administrative claims, generated a ranked recovery for the senior secured debt in the Recovery Rating 'RR5' band, indicating a 'C' instrument rating for the company's USD600 million senior secured notes. RATING SENSITIVITIES Not applicable as the rating has been withdrawn Liquidity and Debt Structure Not applicable as the rating has been withdrawn Issuer Profile Petrofac is an international engineering and construction service provider to the oil and gas production and processing industry. RATING ACTIONS Rating Prior ------ ----- Petrofac Limited LT IDR D Affirmed D LT IDR WD Withdrawn ST IDR D Affirmed D ST IDR WD Withdrawn senior secured LT C Affirmed RR5 C senior secured LT WD Withdrawn RR5 WE SODA: Fitch Lowers LongTerm IDR to 'B+' ------------------------------------------ Fitch Ratings has downgraded WE Soda Ltd.'s Long Term Issuer Default Rating (IDR) to 'B+' from 'BB-'. The Outlook is Negative. Fitch has also downgraded the senior secured notes to 'B+' from 'BB-'. The Recovery Rating is 'RR4'. The downgrade reflects high leverage after the acquisition of Genesis Alkali and Fitch's expectations of weakening trading conditions in the soda ash market, which will limit the company's ability to deleverage to below Fitch's previous assumptions. Fitch expects EBITDA net leverage will peak at 5.1x in 2026 and remain around 3.6x to 2028. The Negative Outlook reflects risks associated with deleveraging, refinancing and corporate governance. The rating continues to reflect WE Soda's scale, industry-leading production costs resulting in strong through-the-cycle margins and its strong market position as the largest global soda ash producer. Rating constraints are single commodity exposure, corporate governance limitations and a challenging macroeconomic and operating environment in Turkiye (BB-/Stable). Key Rating Drivers High Leverage: Fitch forecasts WE Soda's EBITDA net leverage at 4.4x at end-2025, due to the acquisition of Alkali Genesis completed in 1Q25. Fitch said, "We expect deteriorating pricing conditions in Asia and South America will negatively affect EBITDA in 2026 and result in leverage peaking at 5.1x. We expect leverage to remain above 3x through 2028, despite good progress integrating Alkali's assets, an assumed reduction in growth capex and the absence of dividend payments in 2026-2027. We expect the company will generate positive free cash flow (FCF) in 2026-2027 and EBITDA margins will recover to above 30% by 2028, from about 28% forecast for 2026." Corporate Governance Issues: Turkish prosecutors arrested number of Park Holding and CAN Holdings employees in September 2025 and issued an arrest warrant for Mr. Turgnay Ciner in relation to alleged money laundering. Concurrently, Turkiye's Savings Deposit Insurance Fund (TMSF) took control of Park's and CAN's assets. Mr. Ciner is WE Soda's ultimate beneficial owner, while Park holds an indirect 49% stake in the company. Fitch said, "Neither WE Soda nor any of its subsidiaries is being investigated or has been put under TMSF's control. In our view, the investigation amplifies key-man risk, and TMSF's actions are uncertain, although company's Turkish operating assets are pledged as collateral for its international bonds." Refinancing Risk: WE Soda has two revolving credit facilities (RCFs) with a total USD535 million limit (USD274 million outstanding at end-3Q25). Both facilities are set to expire in August 2026. Fitch expect management to formally apply for extensions in January 2026. In the absence of successful refinancing, the company would need to repay RCF drawdowns with internal resources, which would drain its cash balances and result in very tight liquidity in 2026. Transformative Acquisition, Increased Scale: The Alkali Genesis acquisition is transformative for WE Soda, as it increases pro forma production capacity to 9.5 million tonnes (mt) from 5.2mt, and the combined entity is the largest natural soda ash and sodium bicarbonate producer globally. The acquisition expands WE Soda's geographical footprint, adding 45% of production volumes and about 22% of pro forma EBITDA from US-based assets. It also gains access to Alkali's export sales, marketing and logistics subsidiary, ANSAC, with export capacity of 4mt per year through exclusive access to Terminal 4 at the Port of Portland. Strong Cost Position: WE Soda's solution-based production of soda ash in Turkiye is among the lowest-cost methods of extraction for this commodity globally. However, Fitch expects moderate margin dilution, as about 75% of Alkali's production is from higher-cost conventional underground mining. Fitch expects WE Soda to generate high margins of about 30% at midcycle prices, despite price pressure and being a commodity chemicals producer. In addition to its cost advantage, WE Soda's carbon footprint is significantly lower than that of energy-intensive synthetic soda ash producers and creates a competitive advantage for ESG-conscious customers. Pricing Pressure Impacts Earnings: The global soda ash market remains oversupplied due to material production capacity growth, particularly in China, where exports of excess production add pressure on prices in South Asia, and Latin America whereas carbon credit allowances support profits of synthetic soda ash producers in the EU and indirectly prevent price recovery. Fitch expects the soda ash market to grow by low single digits in the medium term, with sustainability-linked end-markets such as solar glass and battery materials the main drivers of higher demand. However, a meaningful reduction in net capacity additions remain a key requirement for the market to balance. Capex Scaled Down: Fitch has reduced its forecast of total capex to about USD700 million for 2025-2028 from about USD1.5 billion previously. WE Soda sold its 40% stake in the Pacific project to Sisecam in December 2024, and Fitch assumes the development of the greenfield Project West in Wyoming will be postponed beyond 2027. Fitch also assumes delays in 0.9mt capacity expansion at the Kazan project and expect new investment in brownfield expansion of US assets to be reduced until markets recover. Maintenance and sustaining capex will account for about 70% of total investments in 2025-2028, which leaves limited scope for further cash-preserving cuts. Peer Analysis WE Soda has higher EBITDA margins than its peers. Its rating also incorporates a weaker operating environment and greater corporate governance limitations than peers. Tata Chemicals Limited (TCL, BB+/Stable) is WE Soda's direct peer. TCL is more diversified, with a presence across industrial chemicals, agri-chemicals and specialty products but most of its earnings come from soda ash. Its production capacity of 4.1mt a year is materially lower than WE Soda's 9.5mt a year. TCL has a mix of natural and synthetic production leading to lower average profitability than WE Soda. TCL's production footprint is more diverse and its financial profile is more robust, with lower leverage than WE Soda's. WE Soda's financial profile is stronger than INEOS Group Holdings S.A. (IGH; BB-/Negative) and INEOS Quattro Holdings Limited (B+/Stable). However, IGH and INEOS Quattro operate in better operating environments, have larger scale and are more diversified, which translates into higher debt capacity compared to WE Soda. WE Soda has a stronger financial profile and significantly larger scale than other European commodity chemical producers like Lune Holdings S.a r.l. (CCC-) or its Turkish commodity chemical peers like Sasa Polyester Sanayi Anonim Sirketi (CCC). Recovery Analysis The recovery analysis assumes that WE Soda would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which Fitch bases its enterprise valuation. The GC EBITDA of USD350 million for the restricted group reflects a weak macro environment negatively affecting demand, oversupply driving prices lower, and moderate corrective actions. Fitch uses a multiple of 5.5x to calculate a GC enterprise value for WE Soda based on its global scale, market leading position, diversification and cost position. Fitch assumes that WE Soda would replace its USD225 million securitisation, corresponding to the highest amount available to be drawn in the last 12 months, with an equivalent super-senior facility when approaching distress. Fitch assumes that WE Soda's all factoring would be replaced by super senior debt in the event of financial distress, which is deducted from the value available for creditor claims distribution. Fitch further assumes WE Soda's RCFs to be fully drawn and to rank pari passu, along with the restricted group debt. After deducting 10% for administrative claims, Fitch's analysis resulted in a waterfall-generated recovery computation for the senior secured notes in the 'RR4' band, indicating a 'B+' instrument rating. RATING SENSITIVITIES Fitch said, "We have increased leverage sensitivities to reflect the company's stronger business profile following the acquisition." Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Failure to refinance revolving credit facilities ahead of maturities and deteriorating liquidity. - Aggressive acquisition strategy or shareholder distributions leading to EBITDA net leverage above 4.5x on a sustained basis - Deterioration of corporate governance issues Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - The Outlook is Negative, making positive rating action unlikely at least in the short term. Successful refinancing of the RCFs together with resolution of corporate governance issues and evidence of deleveraging path to below 4.5x would lead to a revision of the Outlook to Stable. - Record of a conservative financial policy with EBITDA net leverage sustained below 3.0x - Commitment to proactive liquidity management - Improvement of corporate governance framework along with the wider operating environment in Turkiye. Liquidity and Debt Structure WE Soda held USD210 million of unrestricted cash and cash equivalents at end-September 2025. Liquidity is bolstered by availability of USD251 million under RCFs. These include committed facilities of USD435 million and USD100 million, both maturing in August 2026. Fitch expects the company to refinance the RCFs ahead of their maturities. Issuer Profile WE Soda is a leading global producer of soda ash (or sodium carbonate) and sodium bicarbonate with total capacity of 9.5mt. WE Soda is a 100% natural soda ash producer with producing assets in Turkiye and the US. ********* 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- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2026. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *