/raid1/www/Hosts/bankrupt/TCREUR_Public/240226.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
Monday, February 26, 2024, Vol. 25, No. 41
Headlines
A R M E N I A
ACBA BANK: Fitch Hikes LongTerm IDR to 'BB-', Outlook Stable
ARDSHINBANK CJSC: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
ARMECONOMBANK OJSC: Fitch Hikes LongTerm IDR to B+, Outlook Stable
EVOCABANK: Fitch Hikes LongTerm IDR to 'B+', Outlook Stable
F R A N C E
CASPER MIDCO: Moody's Affirms 'B3' CFR & Alters Outlook to Positive
CASPER TOPCO: S&P Upgrades LongTerm ICR to 'B', Outlook Stable
DERICHEBOURG SA: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
G E R M A N Y
ASK CHEMICALS: Moody's Affirms B3 CFR & Alters Outlook to Negative
I R E L A N D
CLONMORE PARK: S&P Assigns B-(sf) Rating on Class F-R Notes
ION TRADING: Moody's Affirms 'B3' CFR, Outlook Remains Stable
I T A L Y
ILVA STEELWORKS: Put Into Extraordinary Administration
K A Z A K H S T A N
NC OAZAGGAZ: Fitch Lowers LongTerm IDRs to 'BB+, Outlook Stable
L U X E M B O U R G
COVIS FINCO: EUR309.6MM Bank Debt Trades at 59% Discount
N E T H E R L A N D S
CELESTE BIDCO: Moody's Lowers CFR to B3 & Alters Outlook to Stable
SPRINT BIDCO: EUR700MM Bank Debt Trades at 53% Discount
S P A I N
PORTAVENTURA: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
S W E D E N
REN10 HOLDING: S&P Affirms 'B' ICR on Upsized Term Loan B
T U R K E Y
TAM FINANS: Fitch Alters Outlook on 'B-' LongTerm IDR to Stable
TURK HAVA: Fitch Affirms 'B+' LongTerm IDRs, Outlook Stable
TURKIYE WEALTH: Fitch Assigns 'B' Rating on $500MM Sr. Unsec. Notes
U N I T E D K I N G D O M
AET TRANSPORT: Goes Into Voluntary Liquidation
AFE SA: S&P Upgrades ICR to 'CCC+', Outlook Stable
ARDONAGH GROUP: Moody's Assigns 'B3' CFR, Outlook Stable
BANGERZ 'N' BURGERZ: Enters Liquidation, Sites Shut Down
BODY SHOP: Next Expresses Interest in Acquiring Assets
BRITISH VOLT: Administrators Seek New Potential Buyers
CD&R FIREFLY 4: S&P Affirms 'B' ICR & Alters Outlook to Stable
ITHACA ENERGY: Moody's Affirms 'B1' CFR, Outlook Remains Stable
LEASED & TENANTED: GBP400MM Bank Debt Trades at 30% Discount
OLLIE QUINN: Bought Out of Administration by OQ Eyewear
TORQUAY UNITED: On Brink of Administration
X X X X X X X X
[*] BOND PRICING: For the Week February 19 to February 23, 2024
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A R M E N I A
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ACBA BANK: Fitch Hikes LongTerm IDR to 'BB-', Outlook Stable
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Fitch Ratings has upgraded ACBA Bank Open Joint-Stock Company's
(ACBA) Long-Term Issuer Default Rating (IDR) to 'BB-' from 'B+',
and the bank's Viability Rating (VR) to 'bb-' from 'b+'. The
Outlook is Stable.
The upgrade reflects sustainable, considerable improvements in the
bank's operating profitability and capitalisation for 2022-2023.
This is primarily driven by Armenia's buoyant economic growth, a
strengthened sovereign credit profile, and resilient local
currency, aided by the positive effects of migration from Russia.
These factors have supported key credit ratios of local banks
(including ACBA) at above historical-average levels with reasonable
stability. Therefore, Ficth has also revised up the banking
sector's operating environment score to 'bb-' from 'b+'.
KEY RATING DRIVERS
ACBA's Long-Term Foreign-Currency IDR reflects its intrinsic
creditworthiness, as underlined by its 'bb-' VR. The rating also
reflects the bank's notable franchise in high-risk lending to
individual farmers, which is counterbalanced by solid core capital
ratios and robust profitability.
Solid Economic Growth: The operating environment for Armenian banks
is supported by the country's strong economic growth. Fitch
estimates the country's GDP growth at a strong 7.4% in 2023 (2022:
12.6%) and forecasts further robust growth of 6.0% in 2024. Fitch
believes increased business activity will continue to support the
sector's performance at a new, above historical average level, and
mitigate asset-quality risks.
Moderate Franchise: ACBA, the fourth-largest Armenian bank, focuses
on agriculture, retail and SMEs, though with limited pricing power
and a sizeable 12% loans share in a fragmented and competitive
market. The performance of its traditional-banking franchise is
highly correlated with economic cycles.
Focus on High-Risk Retail: ACBA has a significant loan exposure to
inherently high-risk individual farmers and consumer finance
(combined 38% of gross loans at end-2023) and SMEs (39%). ACBA's
heightened risk appetite is mitigated by lower-than-average loan
book dollarisation (end-2023: 28%) and high portfolio granularity
with large corporates at only 13% of the loan book.
Asset-Quality Metrics Improved: Credit risk mainly stems from
ACBA's loan book (69% of assets at end-2023). The impaired loans
(Stage 3 plus purchased or originated credit-impaired) ratio was a
low 2.6% at end-2023 (end-2022: 2.8%) due to low impaired loan
generation and heightened lending growth in 2023 (17%). Coverage of
impaired loans by total loan loss allowances (LLAs) was a modest
43% at end-2023. However, net impaired loans made up a limited 6%
of Fitch core capital (FCC).
Performance Strengthened: Annualised operating profit increased to
around 5% of risk-weighted assets (RWAs) in 2022-2023, from 2.5% in
2021. This was mainly driven by additional income earned on
currency-conversion operations in 2022 and wider margins given
higher interest rates in 2023. Fitch expects ACBA's profitability
to remain stronger than the historical average on the back of an
upbeat operating environment.
Comfortable Capital Buffers: The bank's FCC ratio strengthened to a
solid 18.7% at end-2023 (end-2022: 17.1%) on the back of strong
internal capital generation. Fitch expects ACBA to maintain its
capital buffers comfortably above their regulatory minimums,
including additional buffers, resulting in sufficient capital to
sustain future growth.
Stable Funding and Liquidity: ACBA's high 109% loans/deposits ratio
reflects moderate reliance on non-deposit funding (19% of total
liabilities at end-2023). Liquid assets (including cash, due from
banks, and government securities), net of wholesale funding
repayments scheduled for the next 12 months, covered a moderate 34%
of customer deposits at end-2023, while Fitch believes that
maturing wholesale funding could be at least partly rolled over.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A downgrade of ACBA's ratings would be triggered by a sovereign
downgrade.
A downgrade could also result from a material deterioration in the
operating environment, leading to a sharp increase in problem
assets, which would significantly weigh on profitability and
capital. In particular, the ratings could be downgraded if higher
loan impairment charges consume most of the profits for several
consecutive quarterly reporting periods.
A reduction of the FCC ratio to below 15% on a sustained basis, due
to a combination of weaker earnings, faster loan growth and higher
dividend pay-outs, could also be credit-negative. Material funding
disruptions could also result in a downgrade if they translate into
serious refinancing issues for the bank, which it is unable to
mitigate via available local- and foreign-currency liquidity.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of ACBA`s ratings would require a sovereign upgrade,
coupled with a significant improvement of Fitch's assessment of the
local operating environment. In addition, an upgrade would require
a stronger, more diversified franchise, and a longer record of
robust performance.
ACBA's Government Support Rating (GSR) of 'no support' reflects
Fitch's view that the Armenian authorities (BB-/Stable) have
limited financial flexibility to provide extraordinary support to
the bank, given the banking sector's large foreign-currency
liabilities relative to the country's international reserves.
Upside for the GSR is currently limited and would require a
substantial improvement of sovereign financial flexibility as well
as an extended record of timely and sufficient capital support
being provided to local banks.
VR ADJUSTMENTS
The asset quality score of 'b+' is below the category implied score
of 'bb' due to the following adjustment reason: underwriting
standards and growth (negative)
ESG CONSIDERATIONS
ACBA has a score of '3' for Exposure to Environmental Impacts
against the standard score of '2'. The score reflects the bank's
significant exposure to the agricultural sector (around 20% of
loans) and the associated climate risks.
Unless otherwise state in this section the highest level of ESG
credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Prior
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ACBA BANK Open
Joint-Stock Company LT IDR BB- Upgrade B+
ST IDR B Affirmed B
Viability bb- Upgrade b+
Government Support ns Affirmed ns
ARDSHINBANK CJSC: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
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Fitch Ratings has affirmed Ardshinbank CJSC's Long-Term Issuer
Default Rating (IDR) at 'BB-' with a Stable Outlook and the bank's
Viability Rating (VR) at 'bb-'.
The affirmation factors in sustainable, considerable improvements
in the bank's operating profitability, capitalisation as well as
funding and liquidity for 2022-2023. This is primarily underpinned
by Armenia's buoyant economic growth, a strengthened sovereign
credit profile (Armenia upgraded to BB-/Stable in July 2023), and
resilient local currency, aided by the positive effects of
migration from Russia.
These positive developments have supported key credit ratios of
local banks (including Ardshinbank) at above historical-average
levels with reasonable stability. Therefore, Fitch has revised up
the banking sector's operating environment score to 'bb-' from
'b+'.
KEY RATING DRIVERS
Ardshinbank CJSC's IDR is driven by the bank's standalone credit
profile, as captured by its VR. The ratings reflect the bank's
strong domestic franchise (17% of system assets at end-3Q23),
albeit with limited pricing power in a rather granular banking
sector; very strong profitability, which underpins its solid
capital buffers; and ample liquidity. These factors are balanced by
Fitch's assessment of the cyclical operating environment in Armenia
and resulting credit risks from a highly dollarised and
concentrated economy.
Solid Economic Growth: The operating environment for Armenian banks
is supported by the country's strong economic growth. Fitch
estimates the country's GDP growth at a strong 7.4% in 2023 (2022:
12.6%) and forecasts further robust growth of 6.0% in 2024. Fitch
believes increased business activity will continue to support the
sector's performance at a new, above-historical average level, and
mitigate asset-quality risks.
Buoyant Growth in Business Volumes: Ardshinbank has become the
largest beneficiary among local peers of an extraordinary inflow of
migrants and their respective money transfers to Armenia since
2022. The bank has leveraged its leading franchise and built up
solid capital and liquidity buffers through exceptional profits and
gaining new clientele in 2022-2023. Customer deposits increased
126% in 2022 (sector average: 28%), while gross revenue rose 3x
(sector average: 2x). Revenue generation in 2023 was stable.
Announced Acquisition Rating-Neutral: Fitch sees no immediate
rating implications for Ardshinbank from its announced acquisition
of HSBC Armenia, which is to be finalised within the next 12
months. Fitch believes the deal will not materially weigh on
Ardshinbank's capitalisation, due to HSBC Armenia's small size (3%
of system assets at end-3Q23) and higher capital ratios. The
acquisition will strengthen Ardshinbank's already sizeable lending
and funding franchise.
Moderate Impaired Loan Ratios: High loan dollarisation (41% of
gross loans, broadly in line with the sector average) and
concentration remain key weaknesses of the bank's risk profile.
Impaired loans were a moderate 5% of gross loans at end-2023. Stage
2 loans, which Fitch views as high risk, added another 3%. Impaired
and Stage 2 loans (net of specific loan loss allowances) were a
manageable 0.2x Fitch core capital (FCC) at end-2023.
Exceptional Performance, Moderation Likely: Ardshinbank reported a
record operating profit at 9%-11% of risk-weighted assets (RWAs) in
2022-2023 (2018-2021 average: 2.2%). The extremely strong
performance was mainly driven by additional income from money
transfers, currency-conversion operations and wider margins given
higher interest rates. Fitch expects Ardshinbank's profitability to
moderate in the medium term, but to remain significantly stronger
than the historical average.
Capitalisation Materially Above Target: The bank's FCC ratio
strengthened to 20% at end-2023 (end-2021: 16%) on very strong
operating performance and moderate loan growth. Fitch expects the
ratio to remain high in 2024-2025, even after scheduled sizeable
dividend pay-outs and the consolidation of HSBC Armenia. In the
long term, Fitch believes the current FCC ratio may moderate, as it
is significantly above the bank's target, but remain reasonably
strong.
Abundant Liquidity: The bank's customer funding showed good
stability in 2023, after a sizeable one-off deposit inflow from
both non-residents and residents in 2022. The loans/deposits ratio
remained a low 72% at end-2023 (end-2021: 141%). Risks are
mitigated by the bank's ample liquidity. Liquid assets equalled 79%
of customer deposits (or 53% of liabilities) at end-2023. Wholesale
funding due within the next 12 months accounted for a moderate 11%
of liabilities, while the bank plans to roll over most of them.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A downgrade of Ardshinbank's ratings would be triggered by a
sovereign downgrade.
A downgrade could also result from a material deterioration in the
operating environment, leading to a sharp increase in problem
assets, which would significantly weigh on profitability and
capital. In particular, the ratings could be downgraded if higher
loan impairment charges consume most of the profits for several
consecutive quarterly reporting periods.
A reduction of the FCC ratio below 15% on a sustained basis, due to
a combination of weaker earnings, faster growth, including related
to M&A activity, and higher dividend pay-outs, could be
credit-negative.
Material funding disruptions could also result in a downgrade if
they translate into serious refinancing issues for the bank, which
it is unable to mitigate via available local- and foreign-currency
liquidity.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade would require a sovereign upgrade, a more diversified
business model that would strengthen the bank's earning capacity
and reduce volatility of performance, and lower balance-sheet
dollarisation.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
The bank's senior unsecured eurobonds, which were issued by an SPV,
Netherlands-incorporated Dilijan Finance B.V., are rated at the
same level as the bank's Long-Term IDR, as they represent its
unsecured and unsubordinated obligations.
Ardshin's Government Support Rating (GSR) of 'no support' reflects
Fitch's view that the Armenian authorities have limited financial
flexibility to provide extraordinary support to the bank, given the
banking sector's large foreign-currency liabilities relative to the
country's international reserves.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
The bank's senior debt ratings are likely to move in tandem with
the IDR.
Upside for the GSR is currently limited and would require a
substantial improvement of sovereign financial flexibility as well
as an extended record of timely and sufficient capital support
being provided to local banks.
VR ADJUSTMENTS
The business profile score of 'bb-' is above the 'b' category
implied score, due to the following adjustment reason: market
position (positive).
The earnings & profitability score of 'bb' is below the 'bbb'
category implied score, due to the following adjustment reason:
earnings stability (negative).
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Dilijan Finance B.V.
senior unsecured LT BB- Affirmed BB-
Ardshinbank CJSC LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
Viability bb- Affirmed bb-
Government Support ns Affirmed ns
ARMECONOMBANK OJSC: Fitch Hikes LongTerm IDR to B+, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has upgraded Armeconombank OJSC's (AEB) Long-Term
Issuer Default Rating (IDR) to 'B+' from 'B', and the bank's
Viability Rating (VR) to 'b+' from 'b'. The Outlook is Stable.
The upgrade reflects sustainable, considerable improvements in
AEB's operating profitability and capitalisation for 2022-2023.
This is primarily underpinned by Armenia's buoyant economic growth,
a strengthened sovereign credit profile (Armenia upgraded to
BB-/Stable in July 2023), and resilient local currency, aided by
the positive effects of migration from Russia.
These positive developments have supported key credit ratios of
local banks (including AEB) at above historical-average levels with
reasonable stability. Therefore, Ficth has also revised up the
banking sector's operating environment score to 'bb-' from 'b+'.
KEY RATING DRIVERS
AEB's 'B+' IDR is driven by the bank's standalone credit strength,
which is influenced by the cyclical Armenian operating environment,
and resulting credit risks from a highly dollarised and
concentrated local economy. The IDR also reflects consistently low
impaired loans, moderate profitability and currently below-average,
but improving, core capital. The rating is weighed down by the
bank's medium-sized franchise (6% of system loans at end-3Q23),
heavy reliance on wholesale funding, and tight liquidity.
Solid Economic Growth: The operating environment for Armenian banks
is supported by the country's strong economic growth. Fitch
estimates the country's GDP growth at a strong 7.4% in 2023 (2022:
12.6%) and forecasts further robust growth of 6.0% in 2024. Fitch
believes increased business activity will continue to support the
sector's performance at a new, above-historical average level, and
mitigate asset-quality risks.
Low Impairment Ratios: Asset quality is fundamentally vulnerable
due to loan concentrations, significant exposure to the SME and
consumer segments (half of AEB's total loans) and sizeable
foreign-currency (FC) loans (24% of AEB's total loans at end-2023)
in a potentially volatile operating environment. However, AEB's
asset-quality metrics are significantly better than the sector
average. Stage 3 and Stage 2 loans were a low 0.1% and 0.8% of
gross loans, respectively, at end-2023. Loan impairment charges
(LICs) have been low, at below 1% of average loans over the past
decade.
Moderate Profitability: Operating profit improved to 2.5% of
risk-weighted assets (RWAs) in 2022-2023 from below 2% in the
previous years, driven by favourable operating conditions. AEB's
profitability, nevertheless, is below peers' and weighed down by
low operating efficiency (cost/income ratio of 63% in 2023). In its
view, positive economic momentum will continue into 2024,
supporting the bank's revenue growth, while containing LICs.
Adequate Core Capital, Improvements Expected: AEB's Fitch core
capital (FCC) ratio improved to an adequate 13.5% at end-2023 from
11.8% at end-2022. This was underpinned by profits, lumpy
revaluations of fixed assets and equity injections (0.8% of RWAs).
The bank's FCC ratio is currently below peers', but Fitch expects
it to strengthen further on planned common equity placements in
2024 (equal to a sizeable 2.5% of RWAs).
Large Wholesale Funding: AEB's deposit franchise is modest (3% of
system deposits) relative to the bank's size, and customer accounts
were a low 45% of total liabilities at end-2023. The remainder was
wholesale funding, mainly comprising long-term borrowings from
international financial institutions and the Central Bank of
Armenia (CBA). This translated into a 162% gross loans/deposits
ratio, materially above the sector average (91% at end-2023).
Tight Liquidity: AEB's primary liquidity sources covered a moderate
21% of total liabilities at end-2023. These exclude large mandatory
reserves at the CBA (7%), which are inflated by high requirements,
while Fitch believes some of these funds could be made available to
AEB in case of liquidity stress. Net of scheduled wholesale funding
repayments, primary liquid assets covered deposits by a tight 6%.
However, most of the debt could be rolled over, thus avoiding high
pressure on liquidity.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A downgrade of AEB's ratings could result from a sharp increase in
problem assets, which would significantly weigh on profitability
and capital. In particular, the ratings could be downgraded, if
higher LICs consume most of the profits for several consecutive
quarterly reporting periods.
A reduction of the FCC ratio to about 10% on a sustained basis, due
to a combination of weaker earnings, faster loan growth and higher
dividend pay-outs, would also lead to a downgrade.
Material funding disruptions could also result in a downgrade if
they translate into serious refinancing issues for the bank, which
it is unable to mitigate via available local- and foreign-currency
liquidity.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of the bank's ratings would require a significant
strengthening of the bank's franchise, a record of sound operating
profitability considerably above 3% of RWAs, an FCC ratio
materially above 15% on a sustained basis, and a significant
improvement in its funding profile. The latter could be reflected
in a loans/deposits ratio approaching 100%.
AEB's Government Support Rating (GSR) of 'no support' reflects
Fitch's view that the Armenian authorities (BB-/Stable) have
limited financial flexibility to provide extraordinary support to
the bank given the banking sector's large FC liabilities relative
to the country's international reserves.
Upside for the GSR is currently limited and would require a
substantial improvement of sovereign financial flexibility as well
as an extended record of timely and sufficient capital support
being provided to local banks.
VR ADJUSTMENTS
The asset quality score of 'b+' is below the 'bb' category implied
score, due to the following adjustment reason: underwriting
standards and growth (negative).
The earnings & profitability score of 'b+' is below the 'bb'
category implied score, due to the following adjustment reason:
earnings stability (negative).
The capitalisation & leverage score of 'b+' is below the 'bb'
category implied score, due to the following adjustment reason:
risk profile and business model (negative).
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Armeconombank OJSC LT IDR B+ Upgrade B
ST IDR B Affirmed B
Viability b+ Upgrade b
Government Support ns Affirmed ns
EVOCABANK: Fitch Hikes LongTerm IDR to 'B+', Outlook Stable
-----------------------------------------------------------
Fitch Ratings has upgraded CJSC Evocabank (Evoca) Long-Term Issuer
Default Rating (IDR) to 'B+' from 'B', and the bank's Viability
Rating (VR) to 'b+' from 'b'. The Outlook is Stable.
The upgrade reflects sustainable, considerable improvements in
operating profitability and capitalisation for 2022-2023. This is
primarily driven by Armenia's buoyant economic growth, a
strengthened sovereign credit profile, and resilient local
currency, aided by the positive effects of migration from Russia.
These factors have supported key credit ratios of local banks
(including Evoca) at above historical-averages with reasonable
stability. Therefore, Fitch has also revised up the banking
sector's operating environment score to 'bb-' from 'b+'.
KEY RATING DRIVERS
The Long-Term Foreign-Currency (FC) Issuer Default Rating (IDR) of
Evoca is driven by the bank's intrinsic credit strength, as
captured by its VR. The bank's narrow but fast-growing franchise
(4% of system loans at end-3Q23) and above-average loan
dollarisation are balanced by high capital ratios, reasonable
profitability and ample liquidity.
Solid Economic Growth: The operating environment for Armenian banks
is supported by the country's strong economic growth. Fitch
estimates the country's GDP growth at a strong 7.4% in 2023 (2022:
12.6%) and forecasts further robust growth of 6.0% in 2024. Fitch
believes increased business activity will continue to support the
sector's performance at a new, above historical-average level, and
mitigate asset-quality risks.
Sharp Growth in Business Volumes: Evoca became one of the main
beneficiaries of the increased inflow of individuals and associated
money transfers to Armenia in 2022. In 2023, revenues moderated, as
the extraordinary immigrant inflows slowed significantly, but
remained reasonably good, driven by increased business volumes and
a strong economy. Positively, deposit balances remained stable in
2023, and Fitch does not anticipate customer outflows.
Moderate Impairment: The bank's Stage 3 loans ratio increased to a
still limited 3% at end-2023 from 1% at end-2021, while the Stage 2
loans ratio stood at a low 1%. Net of total provisions, Stage 3 and
2 loans together made up a modest 9% of Fitch core capital (FCC) at
end-2023 (end-2022: 10%). Despite its low impaired loan ratio,
Fitch views asset quality as vulnerable due to loan dollarisation
(53% of loans at end-2023), although asset quality may benefit from
the currently favourable operating environment. Moreover, a
sizeable 34% of gross loans is lower-risk mortgages.
Improved Earnings: Evoca reported strong operating profit at 4% of
risk-weighted assets (RWAs) in 2023, which significantly moderated
after an exceptionally strong 12% of RWAs in 2022. The latter was
driven by large one-off incomes mainly earned on currency
conversion operations and transaction banking. Fitch expects the
bank's performance to moderate further but to remain materially
above its historical average (2019-2021 average: 1%).
Narrowing Capital Buffers: The FCC ratio decreased to a moderate
17% at end-2023 (end-2022: 22%) due to significant RWA expansion in
2023 (50% growth) and dividend distribution (a moderate 1% of RWA
at end-2023). Fitch believes the ratio will decrease further to
about 14%-15% within the next few years due to continued high
growth and potential dividend pay-outs. However, this will still be
higher than its historical figures (end-2021: 12%).
Ample Liquidity: Evoca is primarily funded by customer, mainly
retail, accounts (75% of liabilities at end-2023). The
loans/deposits ratio (end-2023: 77%) was below the sector average
of 90% at end-3Q23, reflecting the bank's strong liquidity
position. Wholesale funding (a moderate 19% of liabilities) mainly
consisted of borrowings from international financial institutions
and domestic debt. Evoca's liquid assets, net of wholesale funding
repayments scheduled for next 12 months, covered almost 70% of
customer accounts.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The bank's rating could be downgraded on material asset-quality
deterioration weighing heavily on profitability and capital. A
reduction of the FCC ratio to about 10% on a sustained basis, due
to a combination of weaker earnings, faster loan growth and fairly
high dividend pay-outs would also lead to a downgrade.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of Evoca's ratings would require a more established
business model, and a stronger, more diversified franchise. This
should be combined with the FCC ratio materially above 15% and
operating profit sharply above 3% of RWAs, both on a sustained
basis.
Evoca's Government Support Rating (GSR) of 'no support' reflects
Fitch's view that the Armenian authorities (BB-/Stable) have
limited financial flexibility to provide extraordinary support to
the bank given the banking sector's large foreign-currency
liabilities relative to the country's international reserves.
Upside for the GSR is currently limited and would require a
substantial improvement of sovereign financial flexibility as well
as an extended record of timely and sufficient capital support
being provided to local banks.
VR ADJUSTMENTS
The asset quality score of 'b+' is below the category implied score
of 'bb' due to the following adjustment reason: concentrations
(negative).
The earnings and profitability score of 'b+' is below the category
implied score of 'bb' due to the following adjustment reason:
earnings stability (negative).
The capitalisation and leverage score of 'b+' is below the category
implied score of 'bb' due to the following adjustment reason: risk
profile and business model (negative).
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Prior
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CJSC Evocabank LT IDR B+ Upgrade B
ST IDR B Affirmed B
Viability b+ Upgrade b
Government Support ns Affirmed ns
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F R A N C E
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CASPER MIDCO: Moody's Affirms 'B3' CFR & Alters Outlook to Positive
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Moody's Investors Service affirmed Casper MidCo SAS's (B&B or the
company) B3 corporate family rating and the B3-PD probability of
default rating. Concomitantly, Moody's has assigned a proposed B3
rating on the backed senior secured Term Loan B5 (TL-B5) facility
from Casper BidCo SAS. The outlook was changed to positive from
stable for both entities.
"The outlook change to positive reflects B&B's continued
performance and leverage improvements over the last quarters", says
Elise Savoye, the lead Analyst for B&B. "New hotel openings should
support further revenue generation and credit metrics improvements
going forward, which could result in further positive rating
pressure", adds Mrs. Savoye.
RATINGS RATIONALE
The rating action reflects B&B's revenue growth and increasing
prices outpacing costs resulting in a further recovery of
profitability as indicated by Moody's adjusted EBITDA margin of
23.2% at the end of 2023, on par with pre-pandemic levels. This
also led to a reduction of Moody's adjusted leverage expected at
6.4x as of year-end 2023, below Moody's previous expectations.
Revenue generation is further bolstered by new openings expected to
drive superior growth in the next 12 to 18 months, with favorable
market dynamics for the economy segment B&B operates in, known for
its resilience during macroeconomic downturns. This is evident in
robust bookings so far this year, with additional benefits
anticipated from the Olympic games and the Euro Football Cup in
France and Germany, B&B's two largest markets. The rating, however,
reflects high leverage, primarily due to substantial lease
obligations representing around 65% of the company's Moody's
adjusted debt, exerting pressure on the company's interest
coverage, which is projected to remain around 1.1x to 1.3x over the
next 12 to 18 months.
The B3 rating on the planed TL-B5 reflects its pari-passu rank with
the backed senior secured RCF which shares the same security.
LIQUIDITY
Casper BidCo SAS's adequate liquidity is bolstered by EUR209
million in cash and a committed, undrawn, senior secured revolving
credit facility of EUR120 million as of December 2023. The
forthcoming issuance will enhance B&B's liquidity, as no
significant financial debt will mature before 2031, with existing
EUR970 term loans due in July 2026 and EUR79 million of BPI and PGE
loans due respectively in 2025 and in 2026. Concomitantly RCF's
will be upsized to at least EUR180 million and maturity will be
postponed to 2030. In 2023, the company posted a Moody's adjusted
free cash flow (FCF) of EUR67 million. Moody's expect that Moody's
adjusted FCF would turn negative in case of a potential (not
confirmed) dividend recap in 2024 but would otherwise be positive
despite the large capital expenditure.
The backed senior secured RCF has a springing covenant of net
leverage below 8.5x if drawn above 40%. The company complies with
its financial covenants and Moody's expect it will continue to do
so in the next 12 to 18 months.
OUTLOOK
The positive outlook reflects Moody's anticipation for potential
future growth driven by successful expansion and robust demand in
the economy segment, which will support B&B gradual deleveraging
path. The outlook further mirrors Moody's expectation of no
aggressive payouts to shareholders, supporting FCF generation and
maintaining adequate liquidity over the next 12 to 18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if there is a combination of the
following:
-- Strong liquidity and a return to meaningful and sustained
positive free cash flow
-- Maintaining a consistent track record of non-aggressive
shareholder distribution to support growth and positive Moody's
adjusted FCF despite continuously material growth related capital
spending
-- Improvement in credit metrics with debt/EBITDA decreasing to
around 6.0x, interest coverage gradually improving towards 1.5x and
retained cash flow/net debt above 10%, all on a sustained basis and
including Moody's standard adjustments
Negative rating pressure could arise if:
-- Moody's adjusted gross debt/ EBITDA remains sustainably above
7x;
-- Moody's adjusted EBITA/ Interest remains sustainably below 1x;
-- A rapid and significant deterioration in the underlying
business conditions with lower than anticipated demand or higher
costs leading to materially negative free cash flow and inability
to preserve an adequate liquidity profile
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
STRUCTURAL CONSIDERATION
In the loss-given-default (LGD) assessment for Casper BidCo SAS,
Moody's ranks pari passu the EUR1250 million planed term loan to be
issued and maturing in 2031 and a backed senior secured RCF of at
least EUR180 million, which share the same security and are
guaranteed by certain subsidiaries of the group accounting for at
least 80% of consolidated EBITDA. Moody's are not considering the
EUR715 million existing backed senior secured TL-B3, the EUR255
million existing backed senior secured TL-B4 and the EUR79 million
additional financing received throughout the pandemic from
operating entities into Moody's LGD assessment as Moody's
understand they will be repaid with the proceeds of the planed term
loan.
The term loan will be covenant-light with a spring net leverage
covenant set at 8.5x only applicable to the revolver if it is drawn
over 40% (undrawn as of February 2024). Current debt instrument
ratings aligned with the CFR addresses the fact that there is no
loss absorption from more junior debt.
COMPANY PROFILE
Based in Paris, France, B&B Hotels is a limited-service hotel chain
with 761 hotels in 14 European countries and Brazil as of December
2023; B&B focuses on the "econo-chic" concept - the more upscale
part of the budget segment. The company follows an asset-light
business strategy by leasing almost all its hotels. In 2023, B&B
generated EUR1.2 billion in revenue.
CASPER TOPCO: S&P Upgrades LongTerm ICR to 'B', Outlook Stable
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S&P Global Ratings raised its long-term ratings on Casper Topco,
B&B Hotels' parent company, and its debt to 'B' from 'B-' and
assigned a 'B' rating to the new term loan B (TLB).
The stable outlook reflects S&P's expectation that B&B Hotels will
continue to deliver significant organic growth and expand its
EBITDA, thanks to the integration of new hotels in its network,
with adjusted debt to EBITDA remaining stable at about 6x and
positive FOCF after leases through 2025.
B&B Hotels has announced its intention to issue a EUR1.25 billion
first-lien term loan B (TLB) to repay outstanding TLB tranches and
its French state-guaranteed loans, and retain EUR200 million in
cash that will be used to either finance acquisitions or pay
dividends over the next 12 months.
Despite EUR200 million added to financial debt from the proposed
TLB, the impact on leverage is neutral, thanks to sizable EBITDA
expansion over the past two years. Casper Topco, parent company of
B&B Hotels, intends to issue through its financial subsidiary
Casper Bidco a EUR1.25 billion TLB maturing in 2031. It will use
the proceeds to repay the outstanding EUR715 million and EUR255
million first-lien TLB tranches due 2026 and about EUR79 million of
French state-guaranteed loans received during the pandemic. As part
of the transaction, the company will also increase the size of its
revolving credit facility (RCF) to at least EUR180 million from
EUR120 million and extend the RCF's maturity to 2030, six months
before the new TLB expires. In addition to refinancing the group's
capital structure, the transaction will also fund an additional
EUR200 million of cash on the balance sheet and pay transaction
fees and expenses. The excess cash will be used to finance
acquisition opportunities and growth capex over the coming months.
Absent an attractive acquisition opportunity over the next few
months, the excess proceeds will be distributed to shareholders.
S&P said, "Although the transaction adds EUR200 million to the
company's total debt, it has a neutral effect on our adjusted
leverage metrics. This is achieved through solid EBITDA expansion
over the past two years, which we expect to continue over the next
two to three years. Consequently, we forecast that S&P Global
Ratings-adjusted leverage should reduce to 6.1x in 2024 and 5.8x in
2025, from 6.3x in 2023, if the company performs according to
expectations."
B&B Hotels' revenue base has surpassed 2019 levels and should
continue to do so, thanks to positive market dynamics and the
ongoing contribution from new openings. In 2023, the group
benefitted from growth of revenue per available room (RevPAR). This
was thanks to higher average daily rates, stemming from the
company's ability to pass inflationary pressure to customers, as
these continue to downgrade from midscale and upscale hotel
operators rather than cancel travel plans. Thanks to these positive
trends, occupancy rates have also fully recovered to prepandemic
levels. The robust revenue growth was also fueled by the better
quality and locations of the 222 hotels opened over the past three
years, and by the continuous rollout of its revenue management
system, which allows the company to optimize pricing based on the
specificity of each market in which it operates. As a result, in
2023, B&B Hotels' reported revenue of EUR1.2 billion, up 28% from
2022 and about 93% from 2019. S&P said, "We expect these positive
trends to continue in 2024, boosted to some extent by specific
events, such as the Olympic games in France and the UEFA European
Football Championship in Germany from June to August 2024, which
will attract short-stay leisure tourists. Moreover, we believe
business travel should recover to prepandemic levels in 2024.
Consequently, we forecast RevPAR at about EUR51 in 2024 and EUR52
in 2025, which should result in revenue of about EUR1.4 billion and
EUR1.7 billion in those years, respectively, assuming a successful
execution of the business plan in line with our base case."
The 'B' long-term issuer credit rating is underpinned by the
company's stronger business position, thanks to an efficient
operating model, an ambitious but well-executed investment plan,
and fair geographic diversification. Despite being an asset-heavy
operator, since it leases about 90% of the hotels in its portfolio,
B&B Hotels' mandate-management system offers greater flexibility
and ability to preserve operating margins during downturns. This is
owing to the variable fee based on each hotel's revenue that the
group pays to mandate managers. Through this operating model, the
company can effectively externalize its staff costs, protect itself
against wage inflation, and align incentives with the hotel
managers, resulting in very low employee turnover rates. B&B
Hotels' investment plans are fairly ambitious, and this remains a
risk, in S&P's view. Nevertheless, the company has managed to
execute well on its expansion plans. This is a function of the
company's rather strict investment criteria for new investments,
such as a return on capital employed higher than 25% and 2x rent
coverage for each potential hotel to join the network, once the
newly opened hotel has completed its ramp-up period. S&P said,
"Although execution risk could jeopardize a new venture's
prospects, we believe this prudent approach somewhat mitigates
risks from new investments and results in newly added hotels
reporting positive EBITDA at the end of their first year of
operations. In addition, although the company is exposed to
macroeconomic and event risks, we believe its geographic
diversification mitigates these. Consequently, we revised our
assessment of B&B Hotels' business risk profile to fair from weak,
positioning the company more solidly in the rating category."
High capex and higher interest expense will erode FOCF after leases
in 2024, but the group's cash flow generation remains solid and it
has adequate liquidity. S&P said, "We expect the company to spend
about EUR100 million on the expansion of its hotel network through
greenfield projects or acquisitions. We also expect B&B Hotels to
dedicate about EUR80 million to the maintenance and refurbishment
of its existing network. Together with higher interest expenses
associated with the new TLB, we estimate FOCF after leases at about
EUR7 million in 2024 (or about EUR107 million excluding
expansionary capex), compared with our previous expectations of
EUR43 million for the same year and about EUR28 million in 2023.
Although we believe there is limited flexibility in cancelling
committed capex for new hotels, we recognize that expansionary
capex over the past two years was funded through operating cash
flow and shareholders' contributions to some extent. We believe the
company will continue to self-fund its growth over 2024-2026 and
benefit from the EBITDA generated by hotels it will open in 2024.
Consequently, we forecast that FOCF after leases will increase to
EUR12 million in 2025 (about EUR127 million excluding expansionary
capex)." Furthermore, the company's liquidity position remains
adequate, supported by EUR210 million of cash on the balance sheet
as of Dec. 31, 2023, as well as the additional EUR200 million of
cash from the proceeds of the proposed TLB and fully available RCF
of at least EUR180 million.
The stable outlook indicates S&P's expectations that B&B Hotels
will continue to successfully integrate newly opened hotels and
support revenue and EBITDA expansions over the next 12 months, such
that S&P Global Ratings-adjusted leverage remains stable at about
6x and FOCF after leases will stay positive over the next 12
months.
S&P could lower the rating over the next 12 months if:
-- B&B Hotels fails to integrate new hotels in line with S&P's
base-case forecast, resulting in higher-than-expected exceptional
costs or operational missteps, leading to depressed profitability
or cash flow;
-- FOCF after leases turns negative for a prolonged period,
weakening the group's liquidity position; or
-- The group pursues debt-funded acquisition or shareholder
distributions such that S&P Global Ratings-adjusted leverage
exceeds 6.5x.
Although unlikely, S&P could raise the rating over the next 12
months if:
-- The ramp-up of new openings progresses faster than S&P
expected, thanks in particular to supportive market dynamics,
resulting in adjusted EBITDA that exceeds its forecasts;
-- The company continues to finance its growth with operating cash
flows and demonstrates its ability to consistently generate
materially positive FOCF after leases; and
-- S&P observes a structural and sustainable track record of S&P
Global Ratings-adjusted leverage below 5x, resulting from a more
prudent financial policy.
S&P said, "Social factors are a negative consideration in our
credit rating analysis of Casper Topco, although to a lesser extent
since the company recovered from the impact of the pandemic. We see
social risks as an inherent part of the hotel industry, which is
exposed to health and safety concerns, terrorism, cyber attacks,
and geopolitical unrest."
Governance factors are a moderately negative consideration, as is
the case for most rated entities owned by private-equity sponsors.
The company's highly leveraged financial risk profile points to
corporate decision-making that prioritizes the interests of the
controlling owners and a focus on maximizing shareholder returns.
It also suggests that asset holding periods will generally be
finite.
DERICHEBOURG SA: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
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Fitch Ratings has affirmed French metal-recycler Derichebourg
S.A.'s Long-Term Issuer Default Rating (IDR) and the senior
unsecured rating for its bonds at 'BB+'. The Outlook for the
Long-Term IDR is Stable. The Recovery Rating for the bonds is
'RR4'.
The affirmation reflects Derichebourg's market-leading position in
the French metals recycling business, with additional geographic
diversification into Spain, Germany, Belgium, Mexico and North
America and a disciplined approach to maintaining sustainable
margins. The rating also reflects high Fitch-adjusted EBITDA net
leverage of 2.6x at FYE23 (year-end September), amid weak market
conditions in the European steel industry and large capex.
Fitch expects the group to reduce net debt by around EUR50
million-EUR60 million per annum over the next three years and build
up headroom relative to its negative rating sensitivity of 2.5x
Fitch-defined EBITDA net leverage. This is in line with the group's
financial policy aimed at returning to more conservative debt
levels and will bring EBITDA net leverage closer to 1.5x, from 2.6x
currently. Fitch forecasts Fitch-adjusted EBITDA of around EUR270
million-EUR280 million in the coming three years (equivalent to
around EUR350 million-EUR360 million as reported by the company).
KEY RATING DRIVERS
Slow European Scrap Market Recovery: The energy price shock last
winter and resulting weak economic sentiment in Europe that hit
construction and industrial activity as well as the earthquake in
Turkiye (a major importer of scrap for electric arc furnace
steelmaking) led to a visible decline in scrap demand. For now the
recovery in volumes is led by Turkiye. In Europe some restocking is
taking place, but end-market demand is only expected to firm up
later in 2024.
Financial Policies Target Debt Reduction: Derichebourg invested
substantial capex in FY22 and FY23 to upgrade operational
efficiency of sites added through the Ecore and Lyrsa acquisitions.
With market conditions significantly weakening in the European
metals market in FY23 net debt increased and lifted leverage.
Management intends to reduce company-defined leverage rapidly below
2x and over the medium term closer to 1x. The group will continue
to pay dividends in line with past trend to leave some headroom to
its maximum pay-out of 30% of normalised net income.
Deleveraging to Yield Headroom: Fitch-adjusted EBITDA net leverage
stood at 2.6x at FYE23 (capitalising factoring, but not leases, and
treating lease expenses as operating expense). Fitch assumes that
Derichebourg will reduce adjusted net debt by around EUR50
million-EUR60 million per annum over FY24-FY26, which will see
Fitch-adjusted net leverage closer to 1.5x (broadly equivalent to
Derichebourg's own target of close to 1x). Hence, Fitch expects the
financial profile to improve and build some leverage headroom
relative to the negative rating sensitivity of 2.5x.
Cyclical Earnings: Fitch views the group's FY23 results as broadly
representative of mid-cycle earnings with EUR268 million EBITDA.
While volumes declined moderately and energy prices were very high,
scrap and non-ferrous prices remained at reasonable levels,
supporting robust EBITDA at EUR58/tonne for processed metals.
In a downturn when (ferrous) scrap prices may fall well below
USD300/tonne, the impact on volumes would be more pronounced (with
suppliers holding back material) and the weight of fixed costs
would see earnings retreat materially further (with working capital
reversal reducing the cash flow impact). After contributing its
multi-services business to Elior Group in return for an increased
stake in the latter stable earnings from services contracts (net of
holding company expenses) for Derichebourg are quite small.
Procurement Strategy Defines Margin: Derichebourg is a price taker
in the sale of secondary materials. The group uses quotes from
customers or market indices to establish the maximum rates it can
pay for procurement of metal waste, defining a margin for volumes
to be processed (in favourable markets the procurement team will
aim for margin expansion, whereas in weaker markets the gross
contribution margin will closely track the target level defined by
senior management). The sale and procurement are closely
coordinated, so that commodity-price exposure is minimised and
earnings visibility achieved.
Supportive Energy Transition Trends: Metals recycling has an
important role to play in climate mitigation. The EU Taxonomy aims
to direct investments to economic activities that are most needed
for energy transition. As per company reporting 82.5% of
Derichebourg's turnover and 83.2% of capex in 2023 were EU
Taxonomy-aligned (90.6% and 98.6% EU Taxonomy-eligible). With its
existing equipment Derichebourg has 30% headroom for processing
additional volumes, representing potential organic growth over the
long term as the energy transition accelerates.
DERIVATION SUMMARY
Fitch compared Derichebourg with rated peers such as SPIE SA
(BB+/Stable) and Seche Environnement S.A. (BB/Stable).
SPIE is a business services company involved in (i) installing and
upgrading mechanical, electrical and heating systems, ventilation
and air conditioning; (ii) installing, upgrading, operating and
maintaining voice, data and image communication systems; and (iii)
technical facility management. The fairly technical nature of
services and a focus on smaller, low-risk contracts provide some
barriers to entry and cash flow visibility. The business does not
have a long order backlog, but tends to generate a high proportion
of sales from recurring customers with high retention rates. SPIE's
contracts are diversified across a very wide spectrum of
end-markets and clients (private and public) with only limited
exposure to cyclical sectors, such as oil and gas.
While EBITDA net leverage at 1.6x-1.2x in 2023-2024 supports an
investment-grade rating, SPIE is highly acquisitive and has
sufficient leverage headroom to fund expansion. Fitch would expect
a larger acquisition (above EUR450 million with accretive revenue)
to be partly debt-funded.
Seche is a medium-sized waste company, operating in niche markets
for resource and energy recovery from hazardous (two thirds of
turnover) and non-hazardous (one third) waste sourced mostly from
industrial customers. The group targets services that require
technical expertise, which provide higher barriers to entry and
pricing power (including recycling, waste incineration and landfill
disposal). The group intends to broaden its scope in recycling
waste streams and also sees opportunities in industrial water
treatment. The group has a growing international footprint with
operations in South Africa and Namibia. Its biggest markets today
are France, followed by Italy, with increasing efforts to
cross-sell products to its client base.
The business generates margins in the 15%-20% range, with earnings
on a steady growth path including in the year of Covid, with a
mid-cycle target net debt/EBITDA below 3x (as per company-defined).
The group has smaller scale than Derichebourg, but earnings
variability through the cycle is lower.
KEY ASSUMPTIONS
- Processed volumes in the metals-recycling business to increase by
low single-digit CAGR over the coming four years
- EBITDA per tonne in the recycling business of EUR60 in 2024,
reducing to EUR57 over the medium term
- Earnings contributions from municipal services increasing by less
than EUR10 million to 2026 from EUR30.5 million in 2023
- Effective tax rate of 27% over the next four years
- Capex at around 50% of company-reported EBITDA (equivalent to
Fitch-defined EBITDA adding back right-of-use depreciation and
lease interest) to 2026; normal run-rate compared with large
spending in FY22 and FY23
- Dividends in line with historical trend at below the 30% cap of
normalised net income
- No further debt-funded acquisitions over the next four years
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Meaningful earnings growth from more stable income streams, such
as public-sector services, multi-services or services linked to
waste streams
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- EBITDA net leverage higher than 2.5x on a sustained basis
- Cash flow from operations less capex/total gross debt under 10%
on a sustained basis
- Material support to Elior Group in future refinancing needs
- Large debt-funded acquisitions
LIQUIDITY AND DEBT STRUCTURE
Robust Liquidity: At FYE23 Derichebourg had EUR161.1 million of
cash and cash equivalents as well as a EUR100 million undrawn,
committed revolving credit facility (RCF) with maturity in March
2027. Fitch forecasts that FCF will mostly cover maturities over
the next two years (all existing term debt has manageable and
smooth amortisation; factoring will be rolled over in the ordinary
course of business), so that Derichebourg is funded beyond FY25.
Fitch expects the RCF to be refinanced in 2026 to preserve
conservative liquidity headroom.
ISSUER PROFILE
Derichebourg operates a dense network of 286 collection and
processing sites that are strategically located in industrial areas
with high scrap-disposal volumes and which are close to major
customers with demand for secondary metal resources. It is the
market leader in France with diversification into other European
markets, Mexico and North America.
SUMMARY OF FINANCIAL ADJUSTMENTS
As of FYE23:
- Lease liabilities of EUR281.8 million excluded from the total
debt amount
- Right-of-use depreciation of EUR69.5 million and interest for
leasing contracts of EUR2.8 million treated as operating
expenditure, reducing EBITDA in FY23
- Factoring of EUR196.1 million added to Fitch-adjusted debt for
FY23; movement in factoring balance from the previous year was
reversed in working capital
- The EUR300 million bond was fully reflected in gross debt,
disregarding the issue premium
in the Applicable Criteria.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
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Derichebourg S.A. LT IDR BB+ Affirmed BB+
senior unsecured LT BB+ Affirmed RR4 BB+
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G E R M A N Y
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ASK CHEMICALS: Moody's Affirms B3 CFR & Alters Outlook to Negative
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Moody's Investors Service affirmed the B3 long term corporate
family rating and B3-PD probability of default rating for ASK
Chemicals International Holding GmbH (ASK Chemicals, ASK or the
company). Concurrently, Moody's affirmed the B3 instrument ratings
to the EUR225 million backed senior secured term loan B (TLB) due
January 2026 and EUR40 million backed senior secured revolving
credit facility (RCF) due July 2025 issued by ASK Chemicals
Deutschland Holding GmbH, a subsidiary of ASK Chemicals. Moody's
also changed the outlook on both entities to negative from stable.
RATINGS RATIONALE
The negative outlook reflects ASK's pending maturities issued under
ASK Chemicals Deutschland Holding GmbH (RCF and TLB), high interest
burden and the history of weak free cash flow generation.
The rating affirmation reflects Moody's expectations that over the
next 12-18 months ASK will experience slow improvement in
end-market demand, leading to incremental improvement in EBITDA.
Furthermore, ASK's current credit metrics, estimated at 5.75x
debt/EBITDA and 1.5x EBITDA/Interest coverage, put the company
within Moody's expectations for its B3 rating. These metrics
incorporate Moody's standard adjustments for pensions, factoring
and leases. The rating agency also expects ASK's Moody's adjusted
FCF to potentially remain negative in 2024 depending on the
company's working capital management. A weakening of ASK's key
end-markets such as automotive represents a further risk to this
view. Assuming stable or improving operating performance in 2024
and that the company addresses its maturities on a timely basis at
interest rates the rating agency considers sustainable, Moody's
could stabilize the outlook.
ASK Chemicals' B3 CFR reflects (1) its leading market position in
the niche metal casting chemicals market, (2) the benefits from
high barriers to entry due to the company's technology protected by
a portfolio of more than 1,000 patents and long-term relationships
with customers due to its focus on quality, innovation and R&D, and
(3) the company's low maintenance capex of around 2% of sales,
creating some capacity to generate free cash flow (FCF) in a
downturn.
However, the company's (1) moderate scale and narrow product
portfolio, (2) its exposure to cyclical end-markets, (3) limited
free cash flow (FCF) generation capability, reflecting the
company's high interest costs and relatively weak profitability,
and (4) high Moody's adjusted gross leverage, temper these
strengths.
LIQUIDITY
ASK Chemicals' liquidity is adequate. As of September 30, 2023, the
company had around EUR34 million of cash on hand, and EUR28 million
available on the company's EUR40 million senior secured revolving
credit facility issued by ASK Chemicals Deutschland Holding GmbH.
According to management, the company's revolver was repaid during
Q4 and is fully available.
The company continues to have access to several factoring programs
in place amounting to nearly EUR37 million in Europe, $12 million
in the US and around EUR6 million equivalent in Brazil, of which an
equivalent of EUR35 million was used as of September 30, 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a rating upgrade include: (i) gross
debt/EBITDA consistently below 5.0x; (ii) EBITDA/Interest cover
consistently exceeding 2.0x; (iii) sustained positive FCF and
maintenance of good liquidity and (iv) an expectation that any
potential refinancing of the PIK notes (currently outside of the
restricted group) would still result in pro forma metrics
commensurate with a higher rating.
Factors that could lead to a rating downgrade include: (i) the
company not completing a refinancing of its RCF and TLB well in
advance of maturities or completing refinancing which results in a
capital structure which the rating agency considers to be
unsustainable; (ii) gross debt/EBITDA consistently or well above
6.0x; (iii) EBITDA/Interest cover below 1.5x; (iv) negative FCF or
deterioration of the company's liquidity profile; or (v) a
refinancing of the PIK notes such that pro forma metrics are no
longer commensurate with the current rating category.
ESG CONSIDERATIONS
Governance risks were a key driver of the rating action. ASK faces
refinancing risks related to the maturity of its RCF and TLB issued
by ASK Chemicals Deutschland Holding GmbH, and has exhibited fairly
aggressive financial risk management as the company waited until
less than 12 months prior to its legacy term loan maturity before
completing its recent refinancing in December 2022.
STRUCTURAL CONSIDERATIONS
At a holding company above the rated group and not formally
included in Moody's metrics sit payment-in-kind (PIK) notes. The
rating agency generally views the existence of such instruments as
a constraining factor for the company's rating because there is a
risk that PIK notes may be refinanced at a future point through
additional debt raised within the restricted group.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Chemicals
published in October 2023.
COMPANY PROFILE
Headquartered in Hilden Germany, ASK Chemicals is a global supplier
of high-performance industrial resins and materials. ASK has been
owned by private equity firm Rhรดne Capital since June 2014.
=============
I R E L A N D
=============
CLONMORE PARK: S&P Assigns B-(sf) Rating on Class F-R Notes
-----------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Clonmore Park CLO
DAC's class A-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes, and
A-R Loan. The unrated subordinated notes are still outstanding
since the original issuance.
The ratings assigned to Clonmore Park CLO's notes reflect S&P's
assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
-- The issuer's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio benchmarks
CURRENT
S&P Global Ratings' weighted-average rating factor 2933.87
Default rate dispersion 458.64
Weighted-average life (years) 4.31
Obligor diversity measure 136.13
Industry diversity measure 17.71
Regional diversity measure 1.23
Transaction key metrics
CURRENT
Total par amount (mil. EUR)
including cash and recovery 348.87
Defaulted assets (mil. EUR) 3.50
Number of performing obligors 173
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 1.66
Actual 'AAA' weighted-average recovery (%) 35.34
Actual weighted-average spread (net of floors; %) 4.16
Actual weighted-average coupon (%) 4.05
Under the transaction documents, the rated notes and loan will pay
quarterly interest unless there is a frequency switch event.
Following this, the notes will permanently switch to semiannual
payment.
The portfolio's reinvestment period will end approximately three
years after closing, and the portfolio's maximum average maturity
date will be 7.01 years after closing.
At closing, the portfolio is well-diversified, primarily comprising
broadly syndicated speculative-grade senior secured term loans and
senior secured bonds. S&P said, "Therefore, we have conducted our
credit and cash flow analysis by applying our criteria for
corporate cash flow CDOs. As such, we have not applied any
additional scenario and sensitivity analysis when assigning ratings
to any classes of notes in this transaction."
S&P said, "In our cash flow analysis, we used the EUR348.87 million
par amount, because the transaction is below target par (EUR350.00
million), the actual weighted-average spread of 4.16%, the actual
weighted-average coupon of 4.05%, and we have assumed
weighted-average recovery rates, at all rating levels, in line with
the recovery rates of the actual portfolio presented to us. We
applied various cash flow stress scenarios, using four different
default patterns, in conjunction with different interest rate
stress scenarios for each liability rating category.
"The transaction has a reinvestment target par adjustment, which is
capped at EUR3.0 million, any par leakage could have a negative
ratings effect on the junior rated classes. In our cash flow
analysis, we assumed a starting collateral size of EUR347.0
million.
"Under our structured finance ratings above the sovereign criteria,
we consider that the transaction's exposure to country risk is
sufficiently mitigated at the assigned rating levels.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate the exposure to counterparty risk
under our current counterparty criteria.
"The issuer's legal structure is bankruptcy remote, in line with
our legal criteria.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-1-R to D-R notes could withstand
stresses commensurate with higher ratings than those we have
assigned. However, as the CLO will be in its reinvestment phase
starting from closing, during which the transaction's credit risk
profile could deteriorate, we have capped our ratings assigned to
the notes.
"The class A-R and E-R notes, and A-R Loan can withstand stresses
commensurate with the assigned ratings. Our ratings on the class
A-R, B-1-R, and B-2-R notes, and A-R Loan address the timely
payment of interest and ultimate payment of principal, while our
ratings on the class C-R to F-R notes address the ultimate payment
of interest and principal.
"The class F-R notes' current break-even default rate (BDR) cushion
is negative at the 'B-' rating level. Based on the portfolio's
actual characteristics and additional overlaying factors, including
our long-term corporate default rates and recent economic outlook,
we believe this class is able to sustain a steady-state scenario,
in accordance with our criteria." S&P's analysis reflects several
factors, including:
-- The class F-R notes' available credit enhancement is in the
same range as that of other CLOs S&P has rated and that has
recently been issued in Europe.
-- S&P's BDR at the 'B-' rating level is 15.91% versus a portfolio
default rate of 13.36% if it was to consider a long-term
sustainable default rate of 3.1% for a portfolio with a
weighted-average life of 4.31 years.
-- Whether the tranche is vulnerable to nonpayment soon.
-- If there is a one-in-two chance for this note to default.
-- If we envision this tranche to default in the next 12-18
months.
S&P said, "Following this analysis, we consider that the available
credit enhancement for the class F-R notes is commensurate with a
'B- (sf)' rating.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for the class
A-R to F-R notes, and A-R Loan."
Clonmore Park CLO is a European cash flow CLO securitization of a
revolving pool, comprising euro-denominated senior secured loans
and bonds issued mainly by speculative-grade borrowers. Blackstone
Ireland Ltd. manages the transaction.
S&P said, "In addition to our standard analysis, to provide an
indication of how rising pressures among speculative-grade
corporates could affect our ratings on European CLO transactions,
we have also included the sensitivity of the ratings on the class
A-R to E-R notes and A-R Loan, based on four hypothetical
scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F-R notes."
Environmental, social, and governance
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit assets from being related
to the following industries: production of biological, nuclear,
chemical, or similar controversial weapons, anti-personnel land
mines, or cluster munitions; the production or trade in any product
or activity deemed illegal under international law or the local law
of the obligor; or the trade in cannabis. More than 5% revenue from
tobacco, oil and gas production, coal extraction, or harmful
activities affecting animal welfare. More than 10% revenue from
trade in weapons or firearms. More than 20% revenue from trade in
pornography or prostitution. More than 10% revenue from hazardous
chemicals, pesticides and wastes, ozone-depleting substances;
predatory or payday lending activities; or opioids. More than 10%
electricity from thermal coal. Activities that are in violations of
the UNGC Ten Principles. Accordingly, since the exclusion of assets
from these industries does not result in material differences
between the transaction and our ESG benchmark for the sector, we
have not made any specific adjustments in our rating analysis to
account for any ESG-related risks or opportunities."
Ratings
AMOUNT CREDIT
CLASS RATING (MIL. EUR) ENHANCEMENT (%) INTEREST RATE
A-R AAA (sf) 105.25 38.50 Three/six-month EURIBOR
plus 1.50%
A-R Loan AAA (sf) 110.00 38.50 Three/six-month EURIBOR
plus 1.50%
B-1-R AA (sf) 27.10 27.90 Three/six-month EURIBOR
plus 2.20%
B-2-R AA (sf) 10.00 27.90 5.50%
C-R A (sf) 20.10 22.16 Three/six-month EURIBOR
plus 2.65%
D-R BBB- (sf) 25.70 14.81 Three/six month EURIBOR
plus 4.00%
E-R BB- (sf) 15.70 10.33 Three/six-month EURIBOR
plus 6.82%
F-R B- (sf) 11.65 7.00 Three/six-month EURIBOR
plus 8.18%
Sub NR 23.00 N/A N/A
NR--Not rated.
N/A--Not applicable.
EURIBOR--Euro Interbank Offered Rate.
ION TRADING: Moody's Affirms 'B3' CFR, Outlook Remains Stable
-------------------------------------------------------------
Moody's Investors Service affirmed ION Trading Technologies
Limited's (ION Markets or the company) B3 corporate family rating
and B3-PD probability of default rating. Concurrently, Moody's
affirmed the B3 instrument ratings on the senior secured first lien
term loans and backed senior secured notes due in 2028 and senior
secured revolving credit facility (RCF) due in 2026, all issued by
ION Trading Technologies S.a.r.l. The outlook on both entities
remains stable.
RATINGS RATIONALE
The affirmation of ION Markets' ratings reflects its solid
performance during 2023 balanced with the company's aggressive
financial policy, demonstrated by multiple add-ons to the company's
term loans done in 2023 and early 2024, which added around EUR390
million debt to the group, and constrain leverage reduction.
Leverage remains elevated at 8.3x debt-to-EBITDA (pro forma for the
early 2024 term loan add-on), and absence of reduction over a
prolonged period will increasingly lead to downside ratings
pressure, in particular as refinancing approaches. The company's
solid performance is evidenced by EBITDA growth of around 4% on a
Moody's-adjusted basis to EUR522 million in 2023, even though
overall revenue fell 3% as a 16% decline in non-recurring revenue
was only partially mitigated by 2% growth in recurring revenue.
ION Markets B3 CFR reflects the company's established position as a
provider of mission critical trading-related software solutions to
global financial institutions; strong profitability and positive
underlying free cash flow (FCF) generation; positive long-term
dynamics in terms of software spending and outsourcing; and good
revenue visibility, underpinned by long-term contracts and high
customer retention rates. Good liquidity and currently low
refinancing risk with maturities in 2028 also support the current
rating.
Weak credit metrics, highlighted by persistently high
Moody's-adjusted leverage of 8.3x as of December 2023 (R&D
capitalised and pro forma for EUR185 million equivalent add-on in
early 2024); customer concentration and risks related to a
potential consolidation in the banking system; execution risks
associated with the company's ability to deliver growth in revenue
and EBITDA; aggressive financial policy, characterised by frequent
debt-funded distributions and acquisitions that constrain leverage
reduction; and limited disclosure and complex corporate governance
structures, constrain the rating.
RATING OUTLOOK
The stable rating outlook reflects Moody's expectation that the
company's revenue and EBITDA will improve over the next 12-18
months, such that Moody's-adjusted credit metrics will improve to
levels commensurate with the current rating level. The stable
outlook does not factor in further debt-funded distributions and
acquisitions.
LIQUIDITY
ION Markets' liquidity is adequate. ION had a cash balance of
around EUR108 million as of December 2023 and a fully available
EUR30 million guaranteed revolving credit facility, which matures
in 2026. The liquidity is further supported by Moody's expectation
of positive pre-dividend FCF in 2024 and 2025. The credit
facilities are covenant-lite, with a springing net first-lien
leverage covenant on the revolving credit facility that is tested
if it is drawn by EUR15 million or more.
STRUCTURAL CONSIDERATIONS
The B3 ratings of the credit facilities are in line with the CFR,
reflecting the fact that they are the only financial instruments in
the capital structure. Guarantors for the facilities Moody's rate
represent at least 80% of EBITDA and the security is comprised of
shares, bank accounts, intercompany receivables, and a general and
floating charge over assets (where possible).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive rating pressure is less likely given the magnitude of
improvement in credit metrics expected for a higher rating.
However, it could develop if the company continues to growth its
revenue and EBITDA, such that Moody's-adjusted leverage (R&D
capitalised) improves to below 6.5x; Moody's-adjusted FCF/debt
improves to above 5%; and Moody's-adjusted (EBITDA โ capital
expenditures) / interest expense improves towards or above 2.0x,
all on a sustained basis. Adequate liquidity and financial policy
clarity are also important considerations.
Conversely, negative rating pressure could develop if the company's
revenue and EBITDA growth is weaker than expected such that
Moody's-adjusted leverage (R&D capitalised) remains above 7.5x;
Moody's-adjusted FCF weakens towards breakeven, or Moody's-adjusted
(EBITDA โ capital expenditures)/ interest expenses is below 1.3x,
all on a sustained basis; or if liquidity deteriorates.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Software
published in June 2022.
COMPANY PROFILE
ION Markets, a division of ION Group, is a global provider of
mission critical trading software and services, mainly for
equities, fixed income, derivatives, foreign exchange and options
markets. It sells its solutions primarily to banks, hedge funds,
brokers and other financial institutions. In 2023, the company
generated revenue of EUR1.03 billion and company-adjusted EBITDA of
EUR566 million. The company is majority owned by ION Investment
Group (ION), with TA Associates holding around 3%.
=========
I T A L Y
=========
ILVA STEELWORKS: Put Into Extraordinary Administration
------------------------------------------------------
ANSA reports that the government on Feb. 20 put the troubled former
ILVA steelworks in Taranto, Acciarerie d'Italia (AdI), into
extraordinary administration and named long-time steel industry
manager Giancarlo Quaranta as the extraordinary commissioner to run
it.
According to ANSA, the move has been challenged by majority
shareholder ArcelorMittal with the multinational steel group, which
has 62% of AdI, accusing the government of reneging on agreements.
The government, which holds the remaining 38% of AdI, rejects the
charge while Industry and Made in Italy Minister Sdolfo Urso has
said there are plenty of other steel companies ready to step in and
replace ArcelorMittal, the world's second biggest steel producer,
ANSA relates.
According to the Italian media, Ukrainian group Metinvest is
interested in Taranto, as are Italian company Arvedi and Vulcan
Green Steel, a unit of Indian group Jindal Steel and Power, ANSA
notes.
The Taranto works, once the largest in Europe, currently employ
almost 10,000 workers.
The plant has racked up debts of over three billion euros and is
currently struggling to pay gas and electricity bills, or its
suppliers, who received assurances from the government on Feb. 19,
ANSA discloses.
===================
K A Z A K H S T A N
===================
NC OAZAGGAZ: Fitch Lowers LongTerm IDRs to 'BB+, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded JSC National Company QazaqGaz (QG)'s
Long-Term Foreign- and Local-Currency Issuer Default Ratings to
'BB+' from 'BBB-', and removed the ratings from Under Criteria
Observation (UCO). The Outlooks are Stable.
The Long-Term Foreign-Currency IDRs of QG's fully owned
subsidiaries, Intergas Central Asia JSC (ICA) and KazTransGas Aimak
JSC (KTGA), were also downgraded to 'BB+' from 'BBB-'. The Outlooks
are Stable.
Fitch has also revised lower QG's Standalone Credit Profile (SCP)
to 'b' from 'bbb-'. The downgrade to 'BB+' reflects QG's
significantly deteriorated SCP, which in combination with its
assessment of QG's linkage with the state (Kazakhstan, BBB/Stable)
results in QG being rated two notches below the sovereign's under
Fitch's recently updated Government-Related Entities (GRE) Rating
Criteria. QG's support score is 32.5, which underlines 'Very
Likely' support from the state, based on the Criteria definitions.
Its revision of QG's SCP reflects its drastically weakening
consolidated profitability on the back of (i) practically
discontinued gas transit from central Asia to Russia, (ii) still
loss-making domestic gas tariffs, and (iii) growing domestic
natural gas consumption in Kazakhstan that will constrain gas
exports to China and result in increased gas imports from Russia.
QG's leverage and free cash flow (FCF), however, should remain
adequate given significant dividends QG is expected to be receiving
from Asia Gas Pipeline LLP (AGP), its joint venture (JV) with China
National Petroleum Corporation (A+/Stable).
ICA's and KTGA's 'BB+' ratings reflect strong linkage between QG
and its wholly owned subsidiaries, hence warranting the
equalisation of their ratings.
KEY RATING DRIVERS
Lower SCP: QG's SCP revision follows its reassessment of its
business profile and the quality of its cash flows. Fitch projects
QG's EBITDA (before dividends from JVs) to fall sharply in
2024-2026, potentially even turning negative. This compares with
QG's average EBITDA of around KZT150 billion per year in
2019-2023.
Its weak projected profitability reflects rising domestic gas
consumption in Kazakhstan (which means lower amount of gas
available for exports to China, and the need to buy gas from
Russia), practically stopped transit of central Asian gas to Russia
(which was one of the group's key sources of income in the past),
and increasing but still low domestic gas tariffs, which do not
necessarily cover input costs. To some extent these are offset by
the group's new transit arrangements, such as the transit of
Russian gas to Uzbekistan.
Responsibility to Support: Fitch views QG's 'decision-making and
oversight' as 'Very Strong', given its full control by the
government and its role in implementing the government's energy
policies. Although the state is contemplating selling a minority
share of QG through an IPO, Fitch believes that the government will
maintain strong links with the group. However, Fitch does not give
QG any scores for 'precedents of support' as state support has been
irregular.
Incentives to Support: Fitch assesses QG's 'preservation of
government policy role' as 'Strong' given its important role in the
government's energy strategy and its status as the main domestic
supplier of natural gas. Fitch views its 'contagion risk' as
'Strong' as QG is present in the eurobond market and its default
could affect the ability of Kazakhstan and other GREs to borrow on
international markets.
High Dividends From AGP: AGP is QG's largest JV, which operates
Kazakhstan's largest section of the central Asia-China pipeline. It
has repaid its financial debt and should generate around KZT500
billion in annual pre-dividend free cash flow (FCF) in 2024-2026.
Fitch assumes that QG will receive at least KZT200 billion in
dividends from AGP per annum. This should support QG's cash flow
generation; Fitch projects its EBITDA gross leverage (adjusted for
dividend received from JV, as per Fitch's criteria) to remain
comfortable at around 2x in 2024-2026. However, high reliance on
dividends from AGP suggests that the quality and diversification of
the group's cash flow have significantly deteriorated.
Positive FCF in 2024-2026: Fitch projects QG to generate positive
FCF in 2024-2026 if dividends from AGP are received as expected,
which should support its liquidity and ability to service debt on a
standalone basis. Its capex peaked in 2023 on investments in
domestic trunk pipeline infrastructure, and should normalise in the
following three years.
Increasing but Low Domestic Tariffs: In 2023 QG's average domestic
tariff was around 20% lower than the average price at which QG
purchased gas domestically, and significantly lower than the price
at which QG will be buying natural gas from Russia from 2024. QG
expects domestic tariffs to rise faster than the domestic gas
purchase price in 2024-2026, albeit not sufficiently to lift
profitability. Increasing domestic gas production is one of the
group's strategic objectives, but Fitch expects its production to
remain minimal at least in 2024-2026.
Evolving Regulatory Environment: Uncertainties surrounding the
domestic pipeline transportation and distribution regulatory
environment in Kazakhstan are among the factors negatively
affecting QG's SCP. Tariff indexation can be irregular and in the
past was sometimes affected by political decisions.
Subsidiaries' Ratings Equalised with Parent's: Fitch views the
legal incentives to support under its Parent and Subsidiary Linkage
(PSL) Rating Criteria as 'High' since QG guarantees most of ICA's
and KTGA's external debt. ICA's debt is subject to a cross-default
provision under QG's eurobond.
Strategic incentives are 'High' for ICA and 'Medium' for KTGA. ICA
is the operator of trunk gas pipelines in Kazakhstan for
transporting gas domestically and internationally, and accounts for
34% of the group's estimated EBITDA in 2023-2026, including
dividends from JVs. KTGA is a domestic operator of gas distribution
networks, but its contribution to the group's EBITDA is smaller at
7%. Operating incentives are 'High' for both subsidiaries, due to a
fully integrated management strategy, as well as common planning
and budgeting.
DERIVATION SUMMARY
Fitch rates QG two notches below the sovereign, which is based on
QG's weak SCP of 'b' and its assessment of strong support from the
sovereign. QG has a monopolistic position in domestic gas
transmission and distribution in Kazakhstan, but its profitability
is very weak, mainly in view of loss-making domestic operations.
The group expects its domestic tariffs to increase, but this will
not be sufficient to cover all input costs, particularly as it will
have to rely more heavily on gas imports from Russia. QG's cash
flows, however, will be supported by a sizeable dividend it will be
receiving from its JV.
JSC National Company KazMunayGas's (KMG, BBB/Stable, SCP: bb) IDR
is equalised with the sovereign's, given its higher SCP and overall
strong linkage with the sovereign. KMG's 'bb' SCP reflects its
sizeable hydrocarbon production (though a significant part of it is
coming from JVs); integration into midstream and downstream
activities; and moderate financial leverage. KMG's scale is
significantly larger than that of QG.
Kazakhstan Electricity Grid Operating Company's (KEGOC, BBB/Stable,
SCP: bbb-) IDR is derived from its SCP plus one notch uplift for
strong links with the state with the support score of 25. KEGOC's
'bbb-' SCP reflects a stronger financial profile and improvements
in the regulatory framework following market reform introduced in
June 2023. The SCP benefits from KEGOC's monopoly position,
long-term tariff approval that adds visibility to cash flow
generation, and its large size compared with local peers'.
KEY ASSUMPTIONS
- Brent crude price at USD80/bbl in 2024, USD70/bbl in 2025 and
USD65/bbl in 2026
- Increasing gas imports from Russia; gas exports to China at
around 5bcm per annum to 2026
- Increasing gas transit from Russia to Uzbekistan partially
offsets practically discontinued gas transit from central Asia to
Russia
- Domestic gas tariffs increasing but insufficient to cover all
input costs, including of purchased and imported gas
- Capex peaking in 2023 and moderating thereafter
RATING SENSITIVITIES
QG:
Factors That May, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- A sovereign upgrade
- Stronger ties between Kazakhstan and QG
- Significant improvement in QG's SCP, driven by higher domestic
tariffs comfortably covering input costs, and/or reduced gas import
needs
Factors That May, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- A sovereign downgrade
- Weaker ties between Kazakhstan and QG
- Further material deterioration of QG's SCP, driven for example by
lower-then-expected dividends from its JVs or materially
deteriorating standalone liquidity
ICA and KTGA
Factors That May, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Positive rating action on QG
Factors That May, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Negative rating action on QG
- Weaker ties between QG and ICA (or QG and KTGA), coupled with
deterioration of their credit profiles
Kazakhstan sovereign (see Fitch Affirms Kazakhstan at 'BBB';
Outlook Stable published 17 November 2023):
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Public and External Finances: Erosion of the sovereign balance
sheet; for example, due to disruption of exports, a prolonged
period of looser fiscal policy, a severe commodity price shock, or
a crystallisation of significant contingent liabilities.
- Macro: A deterioration in the economic policy mix that, for
example, undermines the predictability of monetary policy or
confidence in the flexibility of the exchange rate to respond to
external shocks.
- Structural: Spillovers from Russia-related sanctions or
geopolitical tensions, or domestic social or political instability,
which raise risks to macroeconomic performance and stability.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Structural/Macro: Continued strengthening of the economic policy
framework and institutional capacity, supporting enhanced policy
predictability and effectiveness, the business climate, and
economic diversification.
- Public and External Finances: A substantial and sustained
improvement in fiscal performance that leads to further
strengthening of the sovereign balance sheet.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: QG has an adequate liquidity buffer; at
end-2023 its Fitch-estimated cash amounted to around KZT160
billion, versus around KZT50 billion of total maturities in 2024
and 2025. Its largest maturity is an USD706 million eurobond
maturing in 2027. Similarly to its subsidiaries, QG has a record of
good access to Kazakh banks, even though it has no long-term
committed facilities.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
QG is rated two notches below Kazakhstan under its GRE Rating
Criteria.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Intergas Central
Asia JSC LT IDR BB+ Downgrade BBB-
ST IDR B Downgrade F3
LC LT IDR BB+ Downgrade BBB-
Natl LT AA-(kaz)Downgrade AA+(kaz)
senior
unsecured LT BB+ Downgrade RR4 BBB-
senior
unsecured Natl LT AA-(kaz)Downgrade AA+(kaz)
KazTransGas
Aimak JSC LT IDR BB+ Downgrade BBB-
ST IDR B Downgrade F3
LC LT IDR BB+ Downgrade BBB-
Natl LT AA-(kaz)Downgrade AA+(kaz)
senior
unsecured LT BB+ Downgrade RR4 BBB-
senior
unsecured Natl LT AA-(kaz)Downgrade AA+(kaz)
JSC National
Company QazaqGaz LT IDR BB+ Downgrade BBB-
ST IDR B Downgrade F3
LC LT IDR BB+ Downgrade BBB-
Natl LT AA-(kaz)Downgrade AA+(kaz)
senior
unsecured LT BB+ Downgrade RR4 BBB-
senior
unsecured Natl LT AA-(kaz) Downgrade AA+(kaz)
===================
L U X E M B O U R G
===================
COVIS FINCO: EUR309.6MM Bank Debt Trades at 59% Discount
--------------------------------------------------------
Participations in a syndicated loan under which Covis Finco Sarl is
a borrower were trading in the secondary market around 41.3
cents-on-the-dollar during the week ended Friday, Feb. 23, 2024,
according to Bloomberg's Evaluated Pricing service data.
The loans traded in the secondary market around 39.7
cents-on-the-dollar the previous week ended Feb. 16.
The EUR309.6 million facility is a Term loan that is scheduled to
mature on February 18, 2027. About EUR296.0 million of the loan is
withdrawn and outstanding.
Covis Finco SARL is an entity affiliated with Covis Pharma, which
is backed by Apollo Global Management. Covis Pharma distributes
pharmaceutical products for patients with life-threatening
conditions and chronic illnesses. Finco is the borrower under a
term loan facility used to refinance existing debt and refinance
the debt incurred to finance products acquired from AstraZeneca.
Finco has its registered office in Luxembourg.
=====================
N E T H E R L A N D S
=====================
CELESTE BIDCO: Moody's Lowers CFR to B3 & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service has downgraded Celeste BidCo B.V.'s
(Affidea or the company) corporate family rating to B3 from B2 and
its probability of default rating to B3-PD from B2-PD.
Concurrently, Moody's has downgraded to B3 from B2 the instrument
rating on Affidea's senior secured multi-currency revolving credit
facility (RCF) due 2029 and Affidea's senior secured term loan due
2029 โ both issued by Celeste BidCo B.V. The senior secured RCF
is in the process of being upsized to EUR165 million from EUR150
million and the senior secured term loan is also being upsized to
EUR970 million from EUR770 million with the proceeds from the
add-on expected to be used by the company to fund future bolt-on
acquisitions. The outlook on all ratings has been changed to stable
from negative.
The downgrade action reflects an acceleration of debt-funded M&A
transactions within a span of less than 12 months which reflects a
more aggressive financial policy than Moody's had anticipated.
Although the rating agency expects that the company will improve
its financial metrics over the next 12-18 months after a spike in
leverage at the closing of the proposed EUR200 million add-on,
Moody's considers there to be execution risk and there is increased
likelihood that free cash flow (FCF) generation and interest
coverage will remain weaker than what is consistent with a B2 CFR
beyond the next 12 to 18 months, due to large expansionary capital
expenditures.
RATINGS RATIONALE
The proposed EUR200 million add-on to Affidea's existing EUR770
million senior secured term loan will result in an increase in
leverage to 7.7x, excluding any EBITDA contribution from
acquisitions to be funded using the add-on proceeds, up from 6.5x,
as of December 31, 2023. Including an assumed contribution of the
acquisitions, leverage would remain overall unchanged at around
6.5x as of end December 2023. Although Moody's forecasts that
Affidea will reduce leverage towards 6.0x over the course of the
next 12-18 months, driven by EBITDA-accretive acquisitions and
expected organic EBITDA growth, this deleveraging is subject to
execution risk, including from cost pressures related to the
current inflationary environment and potential additional
debt-funded M&A. In terms of FCF generation, Moody's expects the
adjusted FCF (including forecasted growth capital investments) to
remain negative at least in the next 12 months โ Moody's adjusted
FCF was negative at around EUR40 million in 2023. Even excluding
the expansionary capital expenditures, Moody's adjusted FCF to debt
is expected to be in the low single digit percentages, a level
below Moody's expectations for a B2 CFR.
More generally, Affidea's B3 CFR continues to be supported by (1)
its position as the largest provider of advanced diagnostic imaging
(ADI) services in Europe, with leading positions in its main
markets; (2) a relatively high level of geographic diversification;
(3) favorable demand for Affidea's services, given demographic and
outsourcing trends; and (4) management's plans to continue the
consolidation of the European diagnostic imaging industry.
Concurrently, the rating is constrained by the company's (1)
limited scale compared to the broader healthcare services sector;
(2) relatively high fixed-cost base and significant operating
leverage; (3) significant exposure to public-sector clients, which
could potentially limit its pricing power; and (4) the risk that
management will continue to pursue an aggressive financial policy
characterized by additional debt-funded acquisitions.
LIQUIDITY
Affidea has adequate liquidity supported by (1) EUR77 million of
cash on balance sheet as of end December 2023, (2) net proceeds
from the proposed EUR200 million senior secured term loan add-on,
which are forecast to be used for acquisitions over the course of
2024 and 2025, and (3) a EUR150 million senior secured RCF, in the
process of being increased to a proposed EUR165 million which is
expected to remain undrawn as of closing of the transaction. The
senior secured RCF has a leverage covenant set at 9.2x, which is
tested if the senior secured RCF is drawn at more than 50%.
STRUCTURAL CONSIDERATIONS
The B3 rating of the senior secured term loan and senior secured
RCF reflects their pari passu ranking, with upstream guarantees
from material subsidiaries and collateral comprising essentially
share pledges. The B3-PD PDR is in line with the CFR, reflecting
Moody's assumption of a 50% family recovery rate.
OUTLOOK
The stable rating outlook reflects Moody's expectation that the
company will continue to improve its profitability while executing
its ambitious growth plans. The stable outlook also reflects
Moody's assumption that any future debt-funded acquisitions could
potentially increase its leverage to a level that would be still
commensurate with the current B3 CFR.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if Affidea delivers revenue and EBITDA
growth, such that its (1) Moody's-adjusted gross debt/EBITDA falls
below 5.5x on a sustained basis; (2) its Moody's-adjusted FCF/gross
debt increases to 5% on a sustained basis; (3) its Moody's-adjusted
EBITA/interest expense remains higher than 1.5x on a sustained
basis; and (4) Affidea maintains good liquidity.
Downward rating pressure could emerge if the company's (1)
Moody's-adjusted leverage ratio remains above 6.5x, on a sustained
basis; (2) Moody's-adjusted FCF remains negative and
Moody's-adjusted EBITA/interest remains below 1.0x, both on a
sustained basis; (3) Affidea's profitability were to deteriorate
because of regulatory developments, competitive pressure or
significant cost inflation; or (4) the company's liquidity were no
longer adequate. Negative rating pressure could also occur in the
event of large debt-financed acquisitions or distributions to
shareholders.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
COMPANY PROFILE
Affidea is the leading, pan-European provider of advanced
diagnostic imaging (ADI), outpatient, laboratory and cancer care
services. In 2023, the company generated EUR857 million of revenue
and EUR157 million of company-adjusted EBITDA (pre-IFRS 16).
SPRINT BIDCO: EUR700MM Bank Debt Trades at 53% Discount
-------------------------------------------------------
Participations in a syndicated loan under which Sprint Bidco BV is
a borrower were trading in the secondary market around 47.4
cents-on-the-dollar during the week ended Friday, Feb. 23, 2024,
according to Bloomberg's Evaluated Pricing service data.
The loans traded in the secondary market around 49.8
cents-on-the-dollar the previous week ended Feb. 16.
The EUR700 million facility is a Term loan that is scheduled to
mature on September 16, 2029. The amount is fully drawn and
outstanding.
Sprint Bidco B.V. is a special purpose vehicle that owns the
Dutch-based bicycle company Accell. The Company's country of
domicile is the Netherlands.
=========
S P A I N
=========
PORTAVENTURA: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Spanish theme park and resort operator
International Park Holdings B.V.'s (PortAventura) Long-Term Issuer
Default Rating (IDR) at 'B' with a Stable Outlook. Fitch has also
affirmed the senior secured rating at 'B+' with a Recovery Rating
of 'RR3'.
The 'B' rating reflects PortAventura's strong brand in Spain and
other parts of Europe, a well-invested asset base consisting of
three theme parks, on-site hotels and other attractions, which
represent relatively high barriers to entry. These strengths are
balanced by the small size of the business versus wider sector
peers and the low diversification as a single location theme park
and resort with high exposure to the Spanish market.
The Stable Outlook reflects its view that PortAventura will
continue deleveraging over the next three years, firmly positioning
itself within its 'B' rating. Fitch believes it has adequate
liquidity to manage internal investment needs, the seasonal low
point of cash flow in the first months of the year, as well as
relatively high debt servicing costs.
KEY RATING DRIVERS
Strong 2023 Performance: PortAventura performed strongly in 2023,
benefiting from resilient consumer demand for leisure, additional
park opening days and recovering demand in the events business.
Fitch estimates the company achieved Fitch-adjusted EBITDA of more
than EUR120 million, despite inflationary pressures.
EBITDA to Continue Growing: Fitch expects the market environment to
become less favourable for PortAventura in 2024 as pent-up leisure
demand wanes but this is unlikely to prevent the company from
growing its EBITDA. Fitch projects EBITDA to increase by at least
EUR5 million in 2024, even under a conservative assumption of
limited organic growth. This is due to profits from a new hotel
under management and cost savings from the installation of a solar
power plant and a shift to internal hotel laundry services.
Improved Rating Headroom: Fitch estimates EBITDAR leverage reduced
to below 6x in 2023 (2022: 6.5x), positioning PortAventura strongly
at its 'B' rating. Fitch sees potential for further rating headroom
improvement by end-2025 as projected EBITDA growth would result in
EBITDAR leverage reduction to 5.5x. Fitch views the expected
deterioration in EBITDAR fixed charge coverage to 2.1x in 2024 from
2.7x in 2023 as neutral for the rating and likely to improve in
2025 as base rates normalise.
High Capex to Reduce: Fitch expects PortAventura's capex to fall in
2024 after being high in 2022-2023 due to investments in new
attractions, solar power plant and digitalisation initiatives.
Fitch assumes that capex reduction to EUR45 million would still
allow PortAventura to generate neutral to positive free cash flow
(FCF) from 2024, despite higher interest costs as hedges expire.
Leading Spanish Family Destination Resort: The rating benefits from
PortAventura's market position and brand strength as it is the most
visited theme park in Spain and fourth largest in Europe, with good
air and road connections to the resort. The business is
well-invested, with continued capex since its inception in 1995 for
expansion and regular refurbishments across its hotel base, as well
as more recently the opening of the "FerrariLand" theme park in
2017. Fitch judges barriers to entry as relatively high, given the
large initial investment capital required to build a theme park
resort as well as stringent safety and regulatory standards.
Low Diversification: Fitch assesses PortAventura's diversification
as limited, which reflects the high concentration of the business
as a single asset located on the Costa Dorada in Spain. However,
the single site location allows for multiple cost efficiencies
across the various parks and hotels within the site and supports
the high group EBITDA margin of over 40%. Over half of
PortAventura's visitors are Spanish, although this is slowly
diversifying and should proceed on this trajectory thanks to
marketing efforts.
Moderate Cyclicality: Fitch judges PortAventura's end-market demand
to be moderately cyclical, given the discretionary nature of
spending, with exposure to health events and international travel.
However, Fitch thinks that it is somewhat protected versus leisure
industry peers due to its relatively economical price offering
(average day pass of around EUR30).
DERIVATION SUMMARY
Fitch does not have a specific Ratings Navigator framework for
theme park operators. Fitch rates PortAventura based on its Hotels
Navigator due to the similarity in key performance indicators and
demand drivers. In addition, PortAventura now generates around 40%
of revenue from hospitality business (hotels and convention centre)
and its strategy is based on increasing the number of rented hotels
to drive attendance at its theme park.
PortAventura has similar business scale, EBITDAR margin and
diversification as asset-heavy luxury hotel operators Sani/Ikos
Group Newco S.C.A. (B-/ Stable) and FIVE Holdings (BVI) Limited
(B+/ Stable). PortAventura is rated one notch higher than Sani Ikos
due to lower leverage and better FCF profile. Its strategy also has
lower execution risk as Sani Ikos invests heavily into new hotels
development. PortAventura is rated one notch lower than FIVE as
Fitch expects the latter to materially reduce its leverage from
2024-2025 as it receives divestment proceeds and its new hotel
becomes operational.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Revenue growth at around 3.0% in 2024, accelerating to 4%-5% from
2025.
- Fitch-adjusted EBITDA margin to remain steady at around
40.5%-41.5% till 2027.
- Working capital outflows of around 1.0% of sales per year.
- Capital expenditures of around EUR45-EUR50 million per year for
2024-2027.
- No dividends or M&A.
RECOVERY ANALYSIS
Fitch assumes that the company would be reorganised as a
going-concern (GC) in bankruptcy rather than liquidated. In its
bespoke recovery analysis, Fitch estimates GC EBITDA available to
creditors of around EUR90 million. This reflects Fitch's view of a
sustainable, post-reorganisation EBITDA level on which Fitch bases
the enterprise valuation (EV). At the GC EBITDA, the company will
generate low double-digit operating cash flow that would provide no
room for investments in growth capex.
Fitch has applied a 5.5x EV/EBITDA multiple to the GC EBITDA to
calculate a post-reorganisation EV. This multiple reflects the
company's good brand name, well-invested asset base, strong
profitability and high barriers of entry, balanced by relatively
small scale and concentrated geographic location. This is in line
with Pure Gym and 0.5x lower than David Lloyd Leisure, which
benefits from a more diversified portfolio alongside an affluent
membership base that is less sensitive to economic downturn and
lower attrition rates.
PortAventura's upsized EUR640 million senior secured TLB ranks
pari-passu with its EUR52.5 million RCF, which Fitch assumes to be
fully-drawn in a default scenario. Fitch treats unsecured debt,
including Institute of Official Credit loan and reverse factoring,
as ranking behind TLB and RCF. Its waterfall analysis generates a
ranked recovery for PortAventura's senior secured EUR640 million
TLB in the 'RR3' band, indicating a 'B+' instrument rating, one
notch above the IDR. The waterfall analysis output percentage on
current metrics and assumptions is 64%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Structural strengthening of the business profile, evidenced by
larger EBITDA and reduced reliance on cash flow generation from
summer months of operation and admission tickets
- EBITDAR leverage below 5.0x and EBITDAR fixed charge coverage
above 2.5x on a sustained basis
- FCF margin in mid to high single digits on a sustained basis
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Prolonged decline in key performance indicators, leading to
deterioration in profitability
- EBITDAR leverage above 6x and EBITDAR fixed charge coverage below
2.0x on a sustained basis
- Negative FCF generation on a sustained basis
LIQUIDITY AND DEBT STRUCTURE
Satisfactory Liquidity: At end-September 2023, PortAventura had
cash of around EUR50 million and fully undrawn EUR52.5 million RCF.
Fitch expects PortAventura's liquidity to remain satisfactory on
the back of stable operating cash flow generation and flexible
capex, of which about EUR20-25 million is related to maintenance.
Following the amend and extend completed in January 2023 with the
extension of the RCF and TLB to June and December 2026,
respectively, PortAventura now has a more comfortable debt
repayment profile.
Fitch restricts EUR10 million of year-end cash for working capital
purposes.
ISSUER PROFILE
PortAventura is a family-focused entertainment resort located on
the Costa Daurada, in Spain. The resort includes the largest theme
park in Spain alongside on-site hotels and other leisure
attractions.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
International Park
Holdings B.V. LT IDR B Affirmed B
senior secured LT B+ Affirmed RR3 B+
===========
S W E D E N
===========
REN10 HOLDING: S&P Affirms 'B' ICR on Upsized Term Loan B
---------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Ren10
Holding AB (Renta Group) and the group's upsized term loan B (TLB).
The '4' recovery rating, which indicates its expectation of modest
(30%-50%; rounded estimate: 35%) recovery in the event of payment
default, is unchanged.
S&P said, "The stable outlook reflects our expectation that Renta
Group will exhibit S&P Global Ratings-adjusted EBITDA margins of
about 35% through 2024, and we expect the group will benefit from
its recent acquisitions in 2023 and potential bolt-on acquisitions
in 2024 to deleverage toward an adjusted debt-to-EBITDA ratio of
less than 4.5x from about 5.0x in 2023 and positive free operating
cash flow."
Renta Group plans to upsize its existing EUR200 million term loan B
(TLB) to EUR550 million and use the proceeds to completely repay
its existing EUR350 million senior secured notes and EUR200 million
TLB.
S&P said, "We expect Renta Group to exhibit a good operating
performance in 2024, despite soft end markets.
"We expect that the refinancing will have a neutral effect on Renta
Group's gross debt. Renta Group will use the total proceeds of its
TLB, now upsized to EUR550 million, to repay the existing EUR350
million senior secured notes due in 2027. The TLB's maturity will
also be extended to July 2030. At the same time, Renta Group plans
to increase its super senior revolving credit facility (RCF) by
EUR25 million to EUR125 million. Although the financing is broadly
gross debt neutral, Renta Group's debt, as adjusted by S&P Global
Ratings, has risen to about EUR800 million from EUR758 million in
2022 due to higher leases than we expected in our previous forecast
(about EUR250 million in 2023 versus our previous expectation of
about EUR200 million). Because of the full-year effect of
previously signed M&A, we expect S&P Global Ratings-adjusted debt
to EBITDA will have spiked to around 5x in 2023. Once the full-year
accretion of M&A-related revenue and EBITDA is included, we
forecast that leverage will trend toward 4x in 2024.
"We expect Renta Group will continue to grow in 2024. The company's
sales are forecast to be approximately EUR550 million in 2024,
supported by the acquisition of Kalusto expected to close in the
first quarter of 2024. Furthermore, we note that Renta might pursue
additional bolt-on acquisitions in 2024.
"After the company cash's interest costs rose slightly in 2023, we
expect interest expenses to stabilize in 2024. We assume a margin
of Euro Interbank Offered Rate plus 450 basis points on the upsized
TLB in our base case. With this in mind, we forecast funds from
operations (FFO) cash interest coverage to be comfortably above
3.5x in 2023-2024.
"We expect Renta Group's free operating cash flow (FOCF) to be
positive in 2023-2024.This is despite some negative working
capital-related cash outflows over the period (about -EUR18 million
in 2023 and -EUR5 million in 2024) mitigated by lower capex in 2024
(about EUR65 million in 2024 after EUR80 million in 2023) given the
low average age of the fleet. We estimate the group needs to spend
about EUR35 million each year for the fleet's maintenance.
Meanwhile, as many of its peers demonstrated during the pandemic,
Renta Group can rapidly reduce capex to generate positive free cash
flow if markets suddenly cool."
Liquidity remains adequate and benefits from a long-dated debt
maturity profile. The rating is supported by Renta Group's
sufficient liquidity position. Pro forma this planned refinancing,
the group's liquidity sources comfortably cover its cash outlays
for the following 12 months. Renta Group's liquidity will remain
underpinned by its accessible cash balance of about EUR81 million
and about EUR125 million fully available on its undrawn RCF. In
addition, the group's TLB has a long-dated debt maturity profile,
with no material maturities until 2031. The leverage covenant is
tested only if the RCF is drawn net of cash by more than 40%, which
S&P does not expect under its base-case scenario.
S&P said, "The stable outlook reflects our expectation that the
group will exhibit S&P Global Ratings-adjusted EBITDA margins of
about 35% through 2024. At the same time, we expect the company
will benefit from its recent acquisitions in 2023 and potential
bolt-on acquisitions in 2024 to deleverage toward an adjusted
debt-to-EBITDA ratio of less than 4.5x from about 5.0x in 2023 and
positive FOCF.
"We could lower the rating if the company demonstrated weaker
revenue and margins amid unfavorable market conditions or
heightened competition, or if it burned sizable cash without
reducing capex in a timely manner. Credit metrics, such as FFO to
debt of less than 12% and debt to EBITDA exceeding 5x for a
prolonged period due to sizable acquisitions, with no prospects of
recovery, would put pressure on the rating as well.
"We could raise the rating if the group materially grew and
diversified its geographic footprint and product and services
portfolio, expanding in scale and scope versus its rated peer
group, while maintaining its EBITDA margins above 35%. We would
expect Renta Group to build a track record of adjusted debt to
EBITDA sustainably below 4x and positive FOCF of above EUR25
million."
===========
T U R K E Y
===========
TAM FINANS: Fitch Alters Outlook on 'B-' LongTerm IDR to Stable
---------------------------------------------------------------
Fitch Ratings has revised the Outlook on Tam Finans Faktoring
A.S.'s (Tam Finans) Long-Term Foreign-Currency (LTFC) Issuer
Default Rating (IDR) to Stable from Negative, while affirming the
rating at 'B-'. At the same time, Fitch has downgraded Tam Finans's
Long-Term Local-Currency (LTLC) IDR to 'B-' from 'B'. The Outlook
on the LTLC IDR is Stable.
The revision of Tam Finans' Outlook to Stable principally reflects
a gradual stabilisation of Tam Finans's sector risk operating
environment (SROE) following the Turkish sovereign's Outlook
revision to Stable in September 2023. The downgrade of its LTLC IDR
primarily reflects Tam Finans's leverage, which Fitch expects to
remain high in the medium term, and no longer supporting a LTLC
above its 'b-' SROE.
KEY RATING DRIVERS
Intrinsic Profile Drives Ratings: Tam Finans's ratings are driven
by its intrinsic credit profile and reflects the company's small
franchise and a business model that is focused on higher-risk small
businesses operating in a still challenging operating environment,
as well as its high leverage. The ratings also reflect its
consistently strong profitability, limited credit losses despite
the inherently high-risk business model, a granular portfolio, low
market risk, a liquid balance sheet and diversified, albeit largely
secured, funding sources.
High Leverage a Rating Constraint: Tam Finans's gross debt/tangible
equity of 7.3x at end-1H23 is considerably higher than the sector
average (5.7x) and reflects its high tolerance for leverage but
also limited availability of capital sources. Capital is tightly
managed as its shareholder (a private equity firm) is focused on
optimising Tam Finans's return on equity.
Tam Finans's aggressive asset growth has in recent years outpaced
internal capital generation. Total equity grew by more than 2.5x
since end-2021 with the help of strong profitability and full
profit retention, however its high leverage weakens the buffers
against potential losses in Turkiye's volatile operating
environment. High inflation supports assets growth and may erode
Tam Finans's capital and leverage ratios in 2024.
Limited Market Risk; Funding Constraints: Tam Finans's funding and
liquidity position is supported by its highly liquid balance sheet.
About 90% of the assets are short-term factoring receivables with
an average maturity of around 92 days. Exposure to market risk is
low given its predominantly lira- denominated balance sheet and low
sensitivity to interest-rate risk, as both assets and liabilities
are short-dated and broadly matched in maturities. However, funding
is a constraint as it is predominately secured by receivables, is
mostly attracted from local banks.
Stable and Sound Profitability: Tam Finans's pre-tax income/average
assets ratio averaged 6.5% in 2020-1H23, slightly above the sector
average (6.3%). It was able to preserve and widen its interest
margin in 1H23-2022. Its average cost/income ratio in 2020-1H23 was
52%, considerably higher than the sector average of 30%.
Its business model is labour-intensive due to small ticket sizes,
which highlights the importance of gaining further scale. Its solid
return on equity ratio of around 60% should be viewed in light of
its high leverage and high inflation in Turkiye. Fitch expects
profitability to moderate in 2024 due to a gradual rise in
impairment charges and lower margins, especially from 2H24.
Adequately-Managed Credit Risk: Tam Finans's impaired
receivables/gross receivables was low at 1.3% at end-1H23. Impaired
assets (stage 3) were 1.9x covered by loss provisions. Impairment
charges at 3% of average receivables in 1H23 (annualised) were
above the 2020-2022 average of 2.2%, but still comfortably within
the company's wide operational margins. Impairment charges amounted
to a modest 23% of 1H23 pre-impairment profit.
Fitch believes that its asset quality is adequately managed for its
high-risk business model, but Fitch expects continuing pressure in
2024 from higher interest rates and macro-economic volatility.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A deterioration in the domestic operating environment affecting
asset quality and earnings, which in turn would lead to a further
lower tolerance for leverage and, consequently, a downgrade.
A material and sustained increase in leverage (defined as gross
debt/tangible equity) to above 10x, assuming a broadly unchanged
operating environment, could also lead to downgrade of the
Long-Term IDRs primarily due to weakened access to funding and
liquidity, as would a sharp deterioration in asset quality or
profitability that increases solvency risk.
Deterioration of the above factors relative to domestic peers'
could lead to a downgrade of the National Rating.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Material improvements in Turkiye's operating environment, coupled
with Tam Finans's resilient performance, could lead to a rating
upgrade. This, coupled with a significantly improved
creditworthiness relative to domestic peers', would result in an
upgrade of the National Rating.
ADJUSTMENTS
The 'b-' SROE score is below the category implied score of 'bb' due
to the following adjustment reason(s): sovereign rating (negative),
macro-economic stability (negative).
The 'b-' funding, liquidity & coverage score is above the category
implied score of 'ccc' due to the following adjustment reason:
business model/funding market convention (positive).
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Tam Finans
Faktoring A.S. LT IDR B- Affirmed B-
ST IDR B Affirmed B
LC LT IDR B- Downgrade B
LC ST IDR B Affirmed B
Natl LT A-(tur)Affirmed A-(tur)
TURK HAVA: Fitch Affirms 'B+' LongTerm IDRs, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Turk Hava Yollari Anonim Ortakligi
(Turkish Airlines)'s (THY) Long-Term Foreign- and Local-Currency
Issuer Default Ratings (IDR) at 'B+'. The Outlook is Stable. Fitch
has affirmed its Bosphorus Pass Through Certificates Series 2015-1A
class A's long-term rating at 'BB-'. THY's Standalone Credit
Profile (SCP) is 'bb-', while the IDR is constrained by the
airline's links to the government and at one notch above Turkiye's
Country Ceiling of 'B'.
The SCP reflects THY's strong market position as one of the top
five carriers in Europe and the Middle East, with operations
recovering from the pandemic faster than most large legacy carriers
in Europe. Fitch expects THY to grow faster than its peer group,
and debt-funded (including leases) capacity growth to drive EBITDAR
leverage to 3.5x-4x in in 2025-2026, but still leaving comfortable
headroom within the current SCP.
Bosphorus's rating reflects Fitch's top-down approach under Fitch's
Aircraft Enhanced Equipment Trust Certificates (EETC) Rating
Criteria and is capped at two notches above Turkiye's Country
Ceiling of 'B' under Fitch's Non-Financial Corporates Exceeding the
Country Ceiling Rating Criteria.
KEY RATING DRIVERS
Normalised Post-pandemic Operations: THY's 2023-2026 performance is
expected to show a more normalised trend, after a very strong
rebound in 2022, which far exceeded pre-pandemic levels. Fitch
expects revenues to grow in high single digits, mostly driven by
capacity growth, while benefit from pricing improvement (passenger
and cargo) will be limited. However, Fitch expects pressure on
margins, due to continuing supply chain issues in aviation and
increase in other unit costs (including personnel, airport and
handling). Fitch forecasts Fitch-calculated EBITDAR to grow to
USD5.5 billion in 2026, from an estimated USD5.1 billion in 2023.
SCP Reflects Credit Trajectory: Fitch estimates THY's EBITDAR
leverage to have declined to 2.7x at end-2023, from 2.9x in 2022,
on strong EBITDAR generation. However, Fitch expects a gradual
re-leveraging to slightly below 4.0x by 2026 (rating sensitivities
for current SCP at 3.5x-4.5x), mainly due to a material increase in
capex. Fitch expects broadly neutral free cash flow (FCF) for
2024-2026, but a sizeable increase in lease debt in those years.
Ambitious Strategic Plan: THY's strategic plan for 2033 aims to
reach a fleet of more than 800 aircrafts and to transport more than
170 million of passengers, versus 440 aircraft at end-2023 and an
expected 600 at end-2027. While the fleet growth and the
development of AJet (THY's low-cost subsidiary) will gradually
improve THY's business profile, the investments will also lead to a
gradual leverage increase in the medium term. Fitch expects average
annual gross capex (including pre-delivery payments but excluding
leases) of USD3.1 billion in 2024-2026, up from an estimated USD1.6
billion in 2023.
Diversified Network: THY has comparable scale of operations and
network breadth to other major network carriers in EMEA such as
British Airways Plc (BBB-/Stable, SCP: bb+), Air France KLM
(BBB-/Stable) and Deutsche Lufthansa AG (BBB-/Stable). This
supports its business profile and provides the foundation for
further growth. THY's base, Istanbul, is geographically
well-positioned to allow higher usage of lower unit-cost
narrow-body aircraft and serves as a solid transit hub (35%
international-to- international transfer passengers in 9M23)
connecting Europe, Africa and Asia.
Manageable FX Exposure: The majority of THY's debt (including
leases) is in hard currencies, but a high share of revenue is also
generated in US dollars and euros (66% in 9M23), mitigating its
foreign-exchange (FX) exposure. Despite well-managed FX risk due to
a geographically diversified revenue stream, the volatile lira can
add to demand volatility. A depreciating lira has been a strong,
but unsustainable, draw for foreign tourist demand, in its view.
Government Ownership Limits IDR: THY is 49.12%-owned by Turkey
Wealth Fund (TWF), which is fully state-owned, and the government
directly or indirectly nominates seven out of its nine board
members. However, all of THY's non-equity funding is external and
managed autonomously with independent operations and cash
management. Fitch consequently views access and control as 'porous'
under its Parent and Subsidiary Linkage Rating Criteria, which
together with an 'open' assessment for legal ring-fencing,
constrains THY's Long-Term Local-Currency IDR at one notch above
the sovereign rating.
Preferential Treatment Pierces Country Ceiling: THY's Long-Term
Foreign-Currency IDR exceeds the 'B' Country Ceiling, reflecting
airlines' exemption from the communique issued by the Turkish
government in 2022 that introduced an obligation to convert a
portion of exporters' FC revenues into lira. In addition, nearly
all of THY's hard-currency external obligations are aircraft
leases. Fitch views restriction on lease payments as unlikely for
THY, reflecting its flagship carrier status and the risk of
operational disruptions from possible aircraft repossessions.
Bosphorus 2015-1 class A: Given the reduction in outstanding
principal, Fitch now rates the class A certificates based on a
top-down approach, instead of bottom-up previously. Fitch analysis
shows the notes can tolerate up to an 'A' level stress, which
produces a maximum loan-to-vlaue of 95.6%. This is because
favourable amortisation without balloon payments at maturity in
March 2027 causes the LTV to fall rapidly closer to maturity. The
collateral consists of three 2015 vintage B777-300ERs, which Fitch
views as tier 2 assets. However, this still results in the same
'BB-' rating, capped at two notches above Turkiye's Country
Ceiling.
Applying Fitch's Aircraft Enhanced Equipment Trust Certificates
(EETC) Rating Criteria and Exceeding Country Ceiling Criteria,
Fitch deems the EETC as providing offshore structural enhancements
through the EETC structure, its collateral and the offshore
liquidity facility from Paris-based BNP Paribas S.A (A+/Stable),
which can cover the 18 months of debt service needed to avoid
default. This would mitigate transfer and convertibility risk and
enable the Bosphorus rating to exceed the Country Ceiling by two
notches.
DERIVATION SUMMARY
Fitch views British Airways Plc (BBB-/Stable, SCP: bb+), Air France
KLM (BBB-/Stable) and Deutsche Lufthansa AG (BBB-/Stable) as THY's
peers, given their comparable business profile. The three European
legacy carriers benefit from a better location than THY to capture
profitability from transatlantic connections as well as more stable
home market conditions although THY has benefited from the strong
recovery in tourism in Turkiye. THY's 'bb-' SCP implies a
moderately lower debt capacity than its peers', given THY's weaker
home market and higher FX exposure. THY's IDR is constrained at
'B+', reflecting links with its key shareholder, the government of
Turkiye, and the Country Ceiling.
THY has a more robust business profile than its domestic competitor
Pegasus Hava Tasimaciligi A.S. (Pegasus; BB-/Stable) due to a
larger fleet, wider geographic footprint, significantly stronger
market position and more diversified revenue base. These factors
also lead to THY's higher debt capacity for a given rating than
Pegasus'.
KEY ASSUMPTIONS
- Available seat kilometre to grow about 14% in 2024 and about 10%
p.a. in 2025-2026
- Yield normalising at around 9 US cents from 2024 onwards after
having increased 4% in 2023
- Cargo revenues to resume growth from 2025, after declining 30% in
2023
- Capex in line with management guidance for 2023-2026
- No dividend during 2023-2026
RATING SENSITIVITIES
THY
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- An upgrade of Turkiye's sovereign rating and Country Ceiling
would be positive for THY's IDRs. A revision of the Outlook on
Turkiye's sovereign rating to Positive would be replicated on THY
- Funds from operations (FFO) adjusted gross leverage and EBITDAR
leverage below 3.5x, FFO fixed charge over 2.5x, all on a sustained
basis, could lead to an upward revision of the SCP
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- A downgrade of Turkiye's sovereign rating and Country Ceiling
- Tighter links with the government
- FFO gross adjusted leverage and EBITDAR leverage above 4.5x, FFO
fixed-charge cover below 2x, all on a sustained basis, may lead to
a downward revision of the SCP
Bosphorus 2015-1A
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
An upgrade of Turkyie's Country Ceiling
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
A downgrade of Turkiye's Country Ceiling and THY's IDR to below
'B'
Turkiye
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Macro: A return to unconventional policy mix or an incomplete
policy rebalancing that increases macroeconomic and financial
stability risks, for example, an inflation-exchange rate
depreciation spiral, weaker depositor confidence and/or increased
vulnerabilities in banks' balance sheets
External Finances: Increased balance of payments pressures,
including sustained reduction in international reserves, for
example, due to reduced access to external financing for the
sovereign or the private sector and/or sustained widening of the
current account deficit
Structural Features: Serious deterioration of the domestic
political or security environment or international relations that
severely affects the economy and external finances
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Macro: Greater confidence in the sustainability of the current
policy normalisation and rebalancing process resulting in improved
macroeconomic stability, including a sustained reduction in
inflation
External Financing: A reduction in external vulnerabilities, for
example, due to sustained narrowing of the current account deficit,
increased capital inflows, improvements in the level and
composition of international reserves and reduced dollarisation
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: THY's cash position of USD910 million and over
USD5 billion of cash equivalents (mostly time deposits) at end
September 2023 as well as available credit lines of around USD4
billion were sufficient to cover short-term debt maturities of
USD2.2billion (excluding leases). Fitch forecasts positive FCF in
2024.
THY's credit lines are renewed annually. Similar to other Turkish
and emerging-market corporates the company does not pay commitment
fees. It has been successful in renewing its credit lines, and
given its state ownership, Fitch believes those lines will remain
available (these are not included in its liquidity analysis). About
half of the credit lines are with local Turkish banks and the
remainder with foreign banks in Turkiye.
ISSUER PROFILE
THY is a Turkish flagship carrier and one of the largest European
network carriers. It operates from its new hub at Istanbul
airport.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Bosphorus Pass
Through Certificates
Series 2015-1A
senior secured LT BB- Affirmed BB-
Turk Hava Yollari
Anonim Ortakligi
(Turkish Airlines) LT IDR B+ Affirmed B+
LC LT IDR B+ Affirmed B+
TURKIYE WEALTH: Fitch Assigns 'B' Rating on $500MM Sr. Unsec. Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Turkiye Wealth Fund's (TWF: B/Stable)
inaugural USD500 million senior unsecured fixed coupon (8.250%)
notes (XS2764457235) due February 14, 2029, a final long-term
rating of 'B'. The rating is in line with TWF's Long Term Issuer
Default rating (IDR).
The proceeds are being used for general working capital, general
corporate purposes including the debt refinancing and project-based
investment requirements.
Final ratings follow the receipt of documents confirming the
information already received.
KEY RATING DRIVERS
The notes' final rating is equalised with TWF's Long-Term
Foreign-Currency Issuer Default Rating at 'B', reflecting that the
issuance represents a direct, unconditional, unsubordinated and
unsecured obligation of TWF and ranks pari passu with all of its
present and other future unsecured and unsubordinated obligations.
The bond is issued under TWF's programme, which has standard
clauses such as negative pledge, events of default (if due debt
exceeds USD40 million or its equivalent in any other currency), a
call option for the issuer to redeem all notes at any time with a
notice period to the noteholders of at least 30 days and no more
than 60 days as well as the notes becoming immediately repayable if
Turkiye ceases to directly or indirectly control TWF or its
management company.
Fitch expects TWF's financial debt at the HoldCo level to rise
TRY138.1 billion in 2027 from TRY54.5billion in 2022, driven by new
investments and FX volatility. Fitch expects investments to be in
strategic sectors, such as petrochemicals and mining, financial
services, technology, telecommunications and real estate. Net
funding requirements will be partly covered by possible divestments
of minority equity stakes and Fitch forecasts average net borrowing
at about TRY5.3 billion.
TWF has about 92% of its current assets (TRY27.0 billion in 2022)
in cash accounts. Fitch expects large investments to deplete TWF's
cash to TRY3.6 billion in 2027 and TWF's leverage to average about
8.0x under its conservative rating case.
The bond issuance is in line with the Fitch's expected medium-term
increase in total debt. Consequently, Fitch expects no change in
TWF's primary and secondary debt metrics over the medium term that
would be relevant for its Standalone Credit Profile.
DERIVATION SUMMARY
Fitch assumes that the US dollar bond will remain senior,
unsecured, unsubordinated and equalised with TWF's Long-Term
Foreign-Currency IDR until its redemption.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
An upgrade of TWF's Long-Term IDR would be reflected in the senior
unsecured notes' rating.
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
A downgrade of TWF's Long- Term IDR would be reflected in the
senior unsecured notes' ratings.
ISSUER PROFILE
TWF is the sole sovereign wealth fund of Turkiye and manages key
state-owned companies on behalf of the government, promoting the
national economy in alignment with the national strategic agenda.
At end-2022, TWF's total consolidated assets accounted for about
37% of national GDP.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
TWF's IDRs are credit linked to the Turkish sovereign ratings (B/
Stable).
Entity/Debt Rating
----------- ------
Turkiye Wealth Fund
senior unsecured LT B New Rating
===========================
U N I T E D K I N G D O M
===========================
AET TRANSPORT: Goes Into Voluntary Liquidation
----------------------------------------------
Matt Simpson at Daily Echo reports that a Dorset-based
family-owned haulage firm has been put into liquidation.
AET Transport Services Ltd, which was based in Holton Heath Trading
Park between Wareham and Poole, went into voluntary liquidation,
Daily Echo relates.
Documents from the family-owned firm's last full accounts
submission said it employed 47 people, including two directors, as
of August 2022, Daily Echo notes.
They also show the firm posted a GBP177,264 loss in the year to
August 2022 -- the last accounts submitted to Companies House,
Daily Echo discloses.
However, the accounts also showed creditors were owed GBP2.492
million in August 2022, rising from GBP1.621 million the previous
year, Daily Echo states.
Founded in 1977, AET Transport had a 95,000 sq ft distribution
centre in Andover, Hampshire, which includes a 10,000 sq ft
warehouse.
Rachel Hotham and Ruth Gilbert of Milsted Langdon have been
appointed as joint liquidators, Daily Echo relates. Ms. Hotham was
also instructed to wind down Yellow Buses in the summer of 2022,
Daily Echo relays.
In an administrator's report, AET Transport is named as a creditor
and being owed GBP10,500 as of May 2023, according to Daily Echo.
In 2009, AET Transport was devastated by an arson attack that
destroyed six lorries and five trailers, costing GBP1 million,
Daily Echo recounts.
The firm formally went into liquidation on Tuesday, Feb. 13, Daily
Echo relates. A report into the company's finances and who is owed
what is being written, Daily Echo notes.
According to Daily Echo, a spokesperson said there were no
redundancies from AET Transport and staff were offered employment
with one of the director's other companies last year.
AFE SA: S&P Upgrades ICR to 'CCC+', Outlook Stable
--------------------------------------------------
S&P Global Ratings raised to 'CCC+' from 'SD' its issuer credit
rating on AFE S.A. and to 'CCC+' from 'D' its issue rating on the
company's senior secured notes.
The stable outlook reflects S&P's view that, over the next 12
months, AFE will likely maintain adequate liquidity and improve its
collection performance despite lingering uncertainty over the
long-term sustainability of its business.
The completed restructuring allowed AFE to improve its debt
maturity profile and liquidity. Under the restructuring, AFE
amended some terms and conditions of its senior secured notes,
extending their maturity by six years to July 15, 2030, and issued
an additional tranche of the notes of EUR35.7 million at discount,
attracting an additional EUR25 million in cash. AFE also received
EUR132.9 million in a new six-year super senior term loan facility,
which ranks senior to the senior secured notes, and has a 1.0% cash
interest and 11.5% payment-in-kind (PIK) interest. As a result, AFE
has received roughly EUR56 million of available liquidity and does
not have mandatory debt repayment needs in the coming years.
Despite the high interest rate on the new credit facility, the PIK
interest provides relief for AFE's liquidity needs but might lead
to the accumulation of debt over time if not repaid ahead of
maturity. The interest rate on AFE's senior secured notes was
increased to Euro Interbank Offered Rate (EURIBOR) plus 750 basis
points (bps), translating to about 11.4%. Although S&P thinks that
AFE will generate sufficient earnings to service its debt, the
relatively high interest burden will affect the amount of cash AFE
can reinvest into its business growth.
The recapitalization has increased AFE's debt by EUR94 million,
further increasing its already high leverage. S&P said, "We
estimate that, immediately after recapitalization, the company's
gross debt to S&P Global Ratings-adjusted EBITDA ratio exceeded
7.0x and its gross loan-to-value (LTV) ratio was above 90%. Such
elevated leverage reflects both the higher amount of gross debt and
AFE's weak collection performance over 2023. For the first nine
months of 2023, the company's core collections had dropped 47.1%,
and adjusted EBITDA contracted by about 55% because of delays in
some collections and lower recoveries from the disposal of some
nonperforming loans (NPLs). Also, in pursuit of liquidity, the
company materially reduced its asset investments to about EUR14
million for the first nine months of 2023, versus EUR92.8 million
in the same period in 2022. This shrunk the asset base with
estimated remaining collections (ERC) reducing to approximately
EUR510 million (representing a 13.3% contraction year on year), and
we estimate that ERC ended 2023 below EUR500 million, leading to a
much higher LTV."
Improved liquidity and an enhanced capital structure still leave
questions on management's ability to restore AFE to a sustainable
business model. AFE's management expects a marked improvement of
its collections in 2024, driven by the planned realization of some
real estate investments and greater recovery from its NPL
portfolios. S&P said, "Our base case includes core collections
improving to EUR140 million-EUR150 million in 2024 from our
estimate of about EUR93 million in 2023, which would drive EBITDA
growth and support deleveraging. That said, collections from the
real estate assets might be lower than expected and longer to
realize due to valuation uncertainties in this specific market, as
well as their illiquid nature. Similarly, there might be delays in
collecting cash from secured NPLs if the economy materially
worsened, contrary to our current base case of a soft landing.
This, in turn, could lower AFE's available cash to resume
investments in new assets and reduce leverage. We think that AGG,
AFE's new major owner and financial advisor, will likely be key in
the company's business performance, given AGG's established track
record in secured NPL investments and its greater focus on real
estate at this time."
The stable outlook reflects S&P's view that, having completed its
comprehensive funding restructuring and recapitalization, AFE will
likely maintain adequate liquidity and improve the sustainability
of its business through better collection performance over the next
12 months, while accelerating investments and gradually
deleveraging.
Upside scenario
S&P could take a positive rating action on AFE if it saw a
substantial improvement of its business and financial
sustainability. This would hinge on higher collections and
earnings, increased investments in the new assets, at least at
replacement rate, and lower debt to EBITDA and LTV ratios. Lack of
new short-term funding, which could increase financial and
liquidity risks for AFE, would also be a prerequisite for an
upgrade.
Downside scenario
S&P could take a negative rating action if AFE fails to improve its
collection performance and profitability, raising concerns on the
new management team's and shareholders' ability to revive the
company's business and to deleverage over time.
Company Description
AFE S.A. (AnaCap Financial Europe) provides debt-purchasing
solutions in Europe, investing in portfolios of unsecured and
secured debt of small and midsize enterprises, direct investments
in real estate, mortgage debt, and consumer loans with a bias
toward secured debt portfolios. AFE entered the direct real estate
investment business in 2020, which has become a meaningful part of
the company's business mix, representing about 59% of its ERC as of
Sept. 30, 2023.
S&P's Base-Case Scenario
Assumptions
-- Gross collections will increase by 50%-60% in 2024, nearing
EUR140 million-EUR150 million, driven by the planned exit from some
real estate investments and greater recovery from NPL portfolios,
some of which were delayed in 2023.
-- Cash adjusted EBITDA will increase toward EUR115 million-EUR120
million, primarily supported by higher cash collections and modest
growth in operating expenditure. This would follow the pronounced
contraction of about 38% in 2023, according to S&P's estimates.
-- Capital expenditure (capex) for portfolio purchases and real
estate investments will increase to EUR80 million in 2024 and EUR90
million in 2025, reflecting the improvement of operating cash flow
to be used for investments, better liquidity position, and no other
refinancing needs in coming years.
-- Gross debt jumping to EUR476 million immediately after the
restructuring before increasing over the ensuing years by the
amount of the capitalized interest on credit PIK credit facility
(EUR15.3 million in 2024) annually. S&P expects no new debt in
2024-2025.
-- Interest expenses will peak this year, reflecting the highest
base rate and will gradually decline from 2024 due to lower base
rate.
Liquidity
S&P said, "We now view AFE's liquidity as adequate. We factor in
the EUR56 million of liquid assets AFE received via the
recapitalization and lack of material maturities in the coming
years. We also think that liquidity sources will exceed liquidity
uses by at least 1.2x in the 12 months started Sept. 30, 2023."
Principal liquidity sources over the 12 months from Sept. 30 2023:
-- New money facility provided by AGG's ACO2 fund of EUR132.9
million.
-- Cash generation net of cash interest and taxation of about
GBP100 million.
-- Additional issuance of senior secured notes of EUR25 million.
Principal liquidity uses over the same period:
-- RCF maturity of EUR74.4 million.
-- Investments in new portfolios and real estate objects of around
EUR65 million.
-- Working capital outflow of close to GBP5 million.
Issue Ratings - Recovery Analysis
Key analytical factors
-- The issue rating on AFE's senior secured notes is 'CCC+', with
a '4' recovery rating reflecting its expectations of average
recovery (30%-50%).
-- S&P reduced its recovery estimate to 30% from 45% after the
completed restructuring, because of the higher amount of super
senior debt and lower estimated asset base as of year-end 2023.
-- The company's capital structure comprises a EUR132.9 million
new credit facility due January 2030 and EUR343.5 million of senior
secured notes due July 2030.
-- S&P's recovery calculations start with the carrying valuation
of AFE's receivables, to which we apply a 25% discount.
-- At the same time, S&P applies a 40% haircut to the company's
investment in real estate to reflect potentially higher asset value
depletion of real estate upon AFE's default due to their larger
size and less liquid nature. The approach is similar to that S&P
applies for rated peers.
Simulated default assumptions
-- Year of default: 2025
-- Jurisdiction: U.K.
Simplified waterfall
-- Net enterprise value on liquidation: EUR253 million [1]
-- Priority claims: EUR143 million [2]
-- Collateral value available to secured creditors: EUR110
million
-- Senior secured claims: EUR360 million
-- Recovery expectation: 30%-50% (rounded estimate: 30%)
-- Recovery rating: '4'
[1] Net enterprise value is net a 5% admin expense.
[2] All debt includes six months of prepetition interest expense.
ARDONAGH GROUP: Moody's Assigns 'B3' CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service has assigned a B3 corporate family rating
and a B3-PD probability of default rating to Ardonagh Group
Holdings Limited (Ardonagh). Moody's has also assigned B3 ratings
to the new $750 million and EUR500 million backed senior secured
notes being issued by Ardonagh Finco Limited and a Caa2 rating to
the new $1,000 million backed senior unsecured notes being issued
by Ardonagh Group Finance Limited. The outlook assigned to all
entities is stable.
RATINGS RATIONALE
The B3 CFR reflects Ardonagh's broad business mix and a large and
growing international market presence, which support revenue
diversification. It also reflects the company's good organic growth
and healthy EBITDA margins. These strengths are tempered by its
high financial leverage, its historically weak free cash flow
generation and material bottom line losses.
With the transaction, Ardonagh is looking to optimize its capital
structure, by refinancing existing facilities, reduce foreign
exchange (FX) risk, and fund near-term merger and acquisition
(M&A). Pro-forma for the proposed transaction and considering the
effect of the disposal of the retail business and associated debt
repayment, Ardonagh's total gross financial debt will reduce to
ยฃ3.8 billion from ยฃ4.1 billion as at December 2023. Moody's
estimates that Ardonagh's pro-forma debt-to-EBITDA ratio will be
around 9x. Further considering the pro-forma excess cash, the ratio
reduces to around 8x. These metrics incorporate Moody's adjustments
for operating leases and pensions, deferred and contingent
considerations, certain non-recurring costs and run-rate earnings
from acquisitions. Moody's expects the company to reduce its
leverage to below 7.5x as it grows its EBITDA base.
Ardonagh has experienced significant growth in recent years,
expanding its revenue and EBITDA base through a mix of acquisitions
and organically. Ardonagh has a good track record in integrating
businesses and extracting value from acquired companies.
Notwithstanding the company's M&A track record, Moody's notes that
there are inherent risks associated with its active M&A strategy.
Ardonagh's disposal of its retail business will allow the company
to focus on fast growing segments of global property and casualty
(P&C) and specialty and will improve the group's geographic
diversification.
Ardonagh has significantly improved its quality of EBITDA in recent
years, with the gap between reported and adjusted EBITDA narrowing,
as the relative level of non-recurring items has reduced, a credit
positive. Over the past few years, significant cost benefits and
scalable growth have supported EBITDA margin expansion. On a
Moody's basis, pro-forma FY2023 EBITDA margin (excluding retail) is
expected to be around 30%.
The assigned ratings also incorporate Ardonagh's environmental,
social and governance (ESG) considerations, as per Moody's
Investors Service's General Principles for Assessing Environmental,
Social and Governance Risks methodology. Moody's assessment of
Ardonagh's exposure to governance risks is high, reflected in a
Governance Issuer Profile Score (IPS) of G-4, driven by its
aggressive financial policies and its concentrated private
ownership. The company's appetite for leverage and its active M&A
strategy - largely funded by debt - are critical elements of its
credit profile.
--- Probability of Default and Debt Ratings ---
The B3-PD PDR is in line with the B3 CFR reflecting Moody's
assumption of a 50% recovery rate which is standard for
covenant-lite loan structures.
The B3 instrument rating on the backed senior secured notes is in
line with the B3 CFR of Ardonagh Group Holdings Limited. This
reflects the proposed largely senior secured debt structure with
limited levels of deferred consideration and other debt obligations
ranking behind the senior secured notes, the senior secured
facilities and the super senior revolving credit facility.
The Caa2 instrument rating on the backed senior unsecured notes
reflects its junior ranking within the capital structure.
--- Rating Outlook ---
The stable outlook reflects Moody's expectation that Ardonagh's
leverage will steadily reduce, as the company grows its EBITDA base
organically and via bolt-on acquisitions, to levels commensurate
with its rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a rating upgrade include: (i)
debt-to-EBITDA ratio consistently below 6.5x; (ii) (EBITDA-Capex)
coverage of interest exceeding 2x on a sustained basis; (iii)
free-cash-flow to debt ratio consistently exceeding 5%.
Factors that could lead to a rating downgrade include: (i)
debt-to-EBITDA ratio consistently above 7.5x; (ii) a weakening in
the group's liquidity or cash flow generation; (iii) (EBITDA-Capex)
coverage of interest consistently below 1.2x.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in February 2024.
BANGERZ 'N' BURGERZ: Enters Liquidation, Sites Shut Down
--------------------------------------------------------
Restaurant reports that Bangerz 'n' Burgerz has gone into
liquidation with all its sites having closed.
Founded in 2018, the restaurant group, which was run by Bangerz 'n'
Brewz Ltd, had restaurants on the south coast in locations
including Chichester, Southampton, Port Solent, Brighton, Havant,
and Rustington and had at one point operated an estate of seven
restaurants.
According to Restaurant, documents on Companies House reveal that
the company appointed a voluntary liquidator on Feb. 1.
BODY SHOP: Next Expresses Interest in Acquiring Assets
------------------------------------------------------
Mark Kleinman at Sky News reports that Next has approached
administrators to The Body Shop about a potential deal to purchase
parts of the stricken cosmetics chain.
Sky News has learnt that executives from the UK fashion retailing
giant have contacted FRP Advisory to express an interest in
acquiring assets as part of any sale process it decides to launch.
There were doubts this weekend, however, that FRP, which was
appointed to handle the insolvency of The Body Shop in the UK
earlier this month, would elect to run a conventional auction, with
one source suggesting that contact between FRP and Next had already
stalled, Sky News relates.
Next is understood to have been monitoring The Body Shop for some
time, but people close to the FTSE-100 company confirmed that it
had expressed an interest in assembling a deal, Sky News notes.
One obstacle to any deal with The Body Shop may lie in the fact
that its brand and intellectual property (IP) assets are not part
of the administration process, Sky News states.
It is understood that Aurelius, which has only owned The Body Shop
since Jan. 1, is financing the rest of the business, and as part of
that has secured major assets including stock and IP, Sky News
discloses.
FRP, Sky News says, is expected to decide whether to launch an
auction within weeks, with a sale of the restructured business in
its new form back to Aurelius a possibility.
If Next did pursue a purchase of the chain, it would be unlikely to
retain many, if any, of The Body Shop's British stores, Sky News
notes.
Last week, FRP announced the closure of nearly half of its 198 UK
stores, with seven shutting immediately, Sky News recounts.
"Following the earlier sale of loss-making businesses in much of
mainland Europe and parts of Asia, and to support a simplified
business, The Body Shop will also restructure roles in its head
office," Sky News quotes the administrators as saying on Feb. 20.
Hundreds of jobs will be lost from the store closures and a
downsizing of its head office that will leave roughly 400 people
employed there.
"This swift action will help re-energise The Body Shop's iconic
brand and provide it with the best platform to achieve its ambition
to be a modern, dynamic beauty brand that is able to return to
profitability and compete for the long term," FRP added.
BRITISH VOLT: Administrators Seek New Potential Buyers
------------------------------------------------------
Ian Weinfass at Construction News reports that administrators for
Britishvolt are speaking to new potential buyers after the company
that struck a deal to buy it one year ago failed to pay what it
owes.
Britishvolt, which planned to build a GBP3.8 billion
vehicle-battery plant in Cambois, near Blyth, Northumberland, went
into administration in January 2023, Construction News recounts.
Weeks later, battery manufacturer Recharge Industries agreed a deal
to buy the company from administrators EY for GBP8.57 million in a
series of instalments, Construction News relates.
But the Australian company has not paid the final instalment and
remains in default, said a report released last week by EY,
Construction News notes.
According to Construction News, it added: "The joint administrators
have held discussions with a number of additional parties who have
intimated that they may be interested in acquiring the proposed
gigafactory site." EY is also in discussions about selling shares
in the Britishvolt subsidiary that owns the land, Construction News
states.
The deal with Recharge Industries has not been terminated yet, the
report said, but negotiations are nevertheless taking place
elsewhere, Construction News relays.
EY added that it cannot provide more information due to commercial
sensitivities.
Northumberland County Council, which sold the land for the site to
Britishvolt, last week created a GBP15 million strategic fund for
the "acquisition of strategic land and/or property" in the county,
prompting local speculation that it may be one of the parties
negotiating with the administrators, Construction News discloses.
ISG won a GBP300 million contract to build the Britishvolt factory
in December 2020 and its owner William Harrison joined
Britishvolt's board weeks later. It suspended its work on site in
August 2022 citing "design changes", Construction News states.
ISG did not lose any money as a result of the administration,
Construction News notes.
Mechanical & electrical specialist NG Bailey, which was an investor
in Britishvolt, was owed more than GBP2 million when the latter
went under, while Sunbelt Rentals owner Ashtead wrote off a GBP35
million investment in the firm, Construction News states.
The latest report from EY said it was still too early to determine
how much creditors will be paid following the administration,
according to Construction News.
CD&R FIREFLY 4: S&P Affirms 'B' ICR & Alters Outlook to Stable
--------------------------------------------------------------
S&P Global Ratings revised its outlook on Motor Fuel Group's (MFG)
holding company, CD&R Firefly 4 Ltd., to stable from positive and
affirmed its 'B' rating. The proposed issuance is rated 'B' with a
recovery rating of '3', reflecting its expectation of meaningful
recovery (50%-70%; rounded estimate: 55%) in the event of default.
The stable outlook reflects S&P's view that MFG's larger scale and
expertise in rolling out non-fuel operations will facilitate
earnings growth and post-acquisition deleveraging to below 7.0x,
while keeping funds from operations (FFO) to cash interest higher
than 1.5x and strong positive free operating cash flow (FOCF) after
capital expenditure (capex) and leases, with no shareholder
returns.
MFG, the U.K.'s largest independent forecourt operator, plans to
raise GBP1.6 billion in debt to acquire Morrisons' fuel forecourts.
MFG has also secured GBP650 million of preferred equity from its
sponsor, Clayton, Dubilier, & Rice (CD&R), that we regard as debt
and, as part of this transaction, Morrisons will receive about a
20% stake in the enlarged MFG.
The strategic acquisition of Morrisons' fuel forecourts not only
expands MFG's fuel operations but also enhances the versatility of
its income streams and supplier relationships, while adding high
traffic locations for the EV charging network rollout. By adding
337 forecourts along with their 339 acres of real estate, this
acquisition positions MFG as the U.K.'s largest forecourt operator
in terms of fuel volume sales. The combined business will represent
14% of the number of fuel forecourts in the U.K., accounting for
19% of the volume sold. The acquired land includes access to
dedicated development areas across more than 400 sites, earmarked
for expanding MFG's EV-charging network, as the group prepares for
the gradual shift from internal combustion engines (ICE) to EVs.
S&P expects the enlarged business to report S&P Global
Ratings-adjusted EBITDA of about GBP560 million in 2024 and GBP625
million-GBP650 million in 2025, up from our current estimate of
GBP420 million-GBP430 million in 2023.
MFG has maintained stable fuel gross profit despite increased
scrutiny from the U.K. government and the Competition and Markets
Authority (CMA). In 2023, MFG's performance aligned with S&P's
expectations, benefiting from better-than-expected per-liter fuel
margins amid oil price volatility and supply shortages.
Nonetheless, retail fuel forecourt operators have come under
intense scrutiny due to a perceived lack of competitive behavior,
especially during periods of high oil prices. The CMA began
publishing quarterly reports on fuel margins in 2023, with its
initial report indicating a decline in sectorwide fuel margins from
an average of 11.9 pence per liter (ppl) in May to 7.3 ppl in
August. While we await the next CMA publication, it's understood
that the industry experienced a rebound in fuel margins by the
year's end.
MFG plans to maintain supermarket prices at Morrisons' fuel
forecourts, that are typically somewhat lower than prices at MFG's
independent stores. Consequently, S&P expects the enlarged group's
fuel margin per liter to decrease to 10.9 ppl in 2024 from MFG's
stand-alone rate of 12.3 ppl in 2023. Due to the potential for
regulatory intervention, fuel pricing might become even more
competitive, causing overall fuel margins to drop from the
relatively high levels over the past two years. Petrol, diesel, and
mild hybrid EVs made up about 64% of new U.K. vehicle sales in
2023. This supports our belief that demand for traditional fuel
will remain stable over 2024-2025. Moreover, the U.K. government's
decision to postpone the 2030 deadline for banning the sale of
vehicles with ICEs running on petrol or diesel, and the slowdown in
new EV sales during 2023, are likely to further sustain this
demand.
MFG's management team's history of enhancing margins by expanding
non-fuel operations, realizing synergies, and reducing leverage
within 12-18 months after debt-financed acquisitions and dividend
recapitalizations underpin our forecast. The transaction will lead
to an increase in MFG's leverage to about 7.4x (6.2x excluding
preference shares) on a full-year pro forma basis in 2024, which is
much higher than its estimated leverage of 4.5x in 2023. S&P said,
"The deal introduces GBP1.6 billion of financial debt, and we also
include the GBP650 million preferred equity instrument, in our
adjusted debt calculation. Although the preferred shares are
structurally and contractually subordinated and have a perpetual
tenor, holders have the right to mandatory redemption in the event
of a default of any material debt within the group, as well as the
right to demand the sale of the business at a future point in time.
Furthermore, high mandatory preference dividends accrue daily in
kind, but MFG at its discretion can opt for a cash payment. The
increased leverage diminishes the rating headroom. Nevertheless,
our rating also incorporates our view of MFG's consistent financial
policy and its demonstrated ability to reduce leverage following
previous debt-financed acquisitions and dividend recaps. The group
also successfully integrated the transformational acquisition of
MRH in 2018, and achieved targeted cost and working capital
synergies sooner than planned. Consistently high (86%-87%) freehold
ownership of real estate also supports the rating."
MFG's strong cash flow generation remains a key driver of its
credit strength. In 2023, S&P estimates that MFG generated almost
GBP100 million in FOCF after lease payments, following
approximately GBP190 million in 2022. MFG has consistently
generated positive FOCF while continuing to invest about 30% of its
EBITDA in capex. In the past two years, the majority of capex
(GBP60 million-GBP70 million per year) has been mainly directed
toward building retail and food services across its properties, and
toward the expansion of the EV charging infrastructure (about GBP50
million). These expenditures are discretionary and can be scaled
back as needed. S&P said, "We project that earnings from the newly
acquired business will more than compensate for the increased cash
interest burden resulting from this transaction. In addition to a
minimum retail-margin guarantee from Morrisons of about GBP40
million for two years, we expect MFG's management to attain cost
synergies of about GBP40 million over the next three years, helping
to offset some of the potential fuel-margin headwinds. We think the
increase in scale and established supplier relationships should
allow the group to achieve better fuel supply terms. However, we
understand that management doesn't expect to extend any credit
terms beyond 90 days to reduce the impact of oil price volatility
on its working capital. Together with the implementation of a
supply chain financing facility, this should allow for a stable
fuel accounts-payable position related to the acquired forecourts,
estimated at about GBP950 million at the close of the acquisition.
Further enhancing MFG's liquidity and working capital management
flexibility, the company will have access to a GBP661 million
revolving credit facility (RCF), increased from GBP351 million
currently, and to a GBP145 million letters of credit facility."
MFG's franchise model has enabled it to manage its cost pressures
effectively. After the transaction closes, currently expected to be
at the end of April, MFG will assume control of the fuel operations
at Morrisons' fuel forecourts. The transition of the retail kiosks
at these locations will occur progressively, and is expected to be
completed during the year. MFG intends to implement its franchise
model for the retail segments, similar to its approach in its
existing fuel forecourts, by appointing contract managers, and will
not take over the employees or running costs from Morrisons. The
group has been expanding its pool of trained store managers or
franchisees in preparation for this transaction.
S&P said, "The stable outlook reflects our view that MFG's enhanced
scale and expertise in rolling out margin-accretive non-fuel
operations will facilitate earnings growth and deleveraging after
the acquisition to below 7.0x (6.0x excluding preference shares).
We also anticipate that MFG will maintain FFO to cash interest
higher than 1.5x, continue to generate strong positive FOCF after
capex and lease payments, and not pay any shareholder returns.
"We could downgrade MFG if we anticipate that the group is unable
to reduce its S&P Global Ratings-adjusted debt to EBITDA to less
than 7.0x in the 12 months following the transaction's close, or if
its cash generation weakens, such that FFO cash interest coverage
falls to 1.5x or FOCF or liquidity substantially weaken." This
could happen if:
-- The company is unable to achieve its expected supplier terms
for the acquired business, and that affects fuel margins or working
capital;
-- The pace of roll out or profitability of the nonfuel activities
lag current plans;
-- Sustained changes in the U.K. fuel market's fundamentals result
in lower ppl-fuel margins, including any regulatory intervention;
or
-- Discretionary capex, including for the rollout of EV chargers,
increases beyond our expectations or is not scaled back in a timely
manner in case of an earnings shortfall, resulting in an erosion of
FOCF.
S&P could also take a negative rating action if financial policy
becomes more aggressive, such that the group directs surplus cash
toward shareholder remuneration, opts to pay preferred dividends in
cash, or undertakes any sale and leaseback transactions.
In light of the material increase in leverage and limited headroom
under the rating, a positive rating action is unlikely over the
next 12 months. However, S&P could raise the rating if MFG's cash
generation is sufficient to absorb the increase in cash interest,
maintain strong positive FOCF after leases, and sustain the
following credit metrics at all times:
-- Adjusted debt to EBITDA below 5.0x; and
-- FFO to cash interest of at least 2.0x.
This could occur with stable pricing trends among fuel forecourt
operators, supporting resilient fuel margins, and expansion of the
higher-margin nonfuel operations without a significant capital
outflow beyond S&P's forecast. This should be accompanied by a
strong commitment from the financial sponsor to maintain credit
metrics commensurate with a higher rating.
ITHACA ENERGY: Moody's Affirms 'B1' CFR, Outlook Remains Stable
---------------------------------------------------------------
Moody's Investors Service has affirmed the B1 corporate family
rating and the B1-PD probability of default rating of Ithaca Energy
plc (Ithaca). Moody's has concurrently affirmed the B3 instrument
rating of the $625 million senior unsecured notes issued by Ithaca
Energy (North Sea) plc, a wholly-owned subsidiary of Ithaca. The
outlook remains stable for both entities.
RATINGS RATIONALE
The affirmation of Ithaca's B1 CFR reflects the company's currently
solid financial metrics, commitment to well-articulated and
conservative financial policies and adequate liquidity. Altogether,
Moody's considers these factors sufficient to support Ithaca's
credit quality vis-รก-vis the expected reduction in earnings and
cash generation in 2024-25 (under the rating agency's base case)
and the more uncertain UK operating environment after the
introduction of the Energy Profits Levy (EPL).
Robust commodity prices and stable production volumes exceeding 70
thousand barrels of oil equivalent per day (kboepd) resulted in
strong profitability and cashflow generation in 2022-23, supporting
Ithaca's rapid de-leveraging after the debt-funded transformational
acquisition of Siccar Point Energy. Ithaca's financial profile is
strong with Moody's-adjusted gross debt to average daily production
of around $16,800/ produced barrel of oil equivalent (corresponding
to 0.7x Moody's-adjusted gross debt to EBITDA), retained cash flow
to gross debt (RCF/debt, Moody's-adjusted) of 77% and $465 million
of FCF generated in the last twelve months ended September 2023
(LTM September 2023).
Moody's expects Ithaca's production to moderately decline towards
60 kboepd through 2025 due to the mature asset base and investment
deferrals announced in 2023. Assuming Brent oil price of $70/barrel
in 2024 and $65/barrel thereafter, Ithaca will generate EBITDA
(Moody's-adjusted) of around $1.1 billion in 2024 and of $800
million in 2025, corresponding to cashflow from operations of $1.0
billion and $900 million. After deducting Moody's-adjusted capital
expenditures of $700-$800 million per annum, as well as dividend
payments of $270 million and $140 million in 2024 and in 2025
(assuming dividend payouts of, respectively, 20% and 15%),
Moody'-adjusted free cash flow will reduce significantly towards
$60 million in 2024 before turning negative $220 million in 2025.
Lower production and modest incremental reliance on external
liquidity will drive leverage towards $18,000/barrel of oil
equivalent (boe) in 2024 and further to $21,000/boe in 2025, while
RCF/debt shall remain comfortably above 60%. Moody's projections do
not include support from commodity hedging put in place after 20
November 2023, which could sustain stronger metrics than the
abovementioned ones.
Ithaca's commitment and delivery against its conservative financial
policies (including hedging to protect against low hydrocarbon
prices), along with the retention of a solid financial and
liquidity positions are key to maintain the current rating given
the greater unpredictability of the company's domestic operating
environment. Moody's expects Ithaca to maintain production volumes
in excess of 50,000 kboepd at this point, or to eventually increase
investments to sustain a production profile that is commensurate
with the current rating. Failure to do so or more aggressive
financial policies weakening Ithaca's financial profile and
liquidity would put negative pressure on the rating.
ESG CONSIDERATIONS
Ithaca's ESG Credit Impact Score of 4 indicates that the rating is
lower than it would have been if ESG risk exposure did not exist.
The score primarily reflects exposure to environmental and social
risks because Ithaca's earnings and cashflow generation capacity
rely upon demand for oil and gas in the context of carbon
transition. Social risks also include subjection to increased
taxation on O&G upstream activities in the UK. These risks are
partially mitigated by Ithaca's commitment and track record to
overall conservative financial policies, where the company's
extensive and effective hedging strategies offset re-leveraging
risks associated with debt-funded M&A. Governance considerations
also reflects the concentrated ownership by Delek Group Ltd., whose
influence is mitigated by a number of independent board members and
by a relationship agreement disciplining Ithaca's independence from
its anchor shareholder. Ithaca's disclosure is adequate, also
considering the company's status as a listed company.
LIQUIDITY
Ithaca's liquidity is adequate. Moody's assessment incorporates:
-- $148 million of unrestricted cash balances available as of 30
September 2023
-- the expectation of positive, albeit lower than historically FCF
generation under Moody's base case over the next 12-18 months,
given lower production alongside rising requirements for capital
expenditures and dividends
-- access to a RBL facility of $1,225 million (including a $300
million sublimit for letters of credit) due May 2026. Following its
periodic redetermination, the facility's borrowing base has reduced
to $835 million and will start amortising in July 2024. Moody's
expects modest reliance on the facility, thus the RBL should
continue to adequately support Ithaca's liquidity needs in the next
12-18 months. At this stage, Moody's analysis is based on Ithaca's
existing borrowing base, which takes full account of the current
EPL regime and, concurrently, excludes future and not yet known
amendments to the regime that would potentially alter Ithaca's
borrowing capacity
-- ample headroom under the net debt/EBITDA of below 3.5x attached
to the RBL facility
STRUCTURAL CONSIDERATIONS
Ithaca's capital structure includes a $1.225 billion secured RBL
facility (of which $300 million is reserved for letters of credit)
and a $625 million of senior unsecured notes due 2026 alongside a
$100 million unsecured term loan due 2028 provided by BP p.l.c.
(BP, A2 positive). The B3 rating on the backed senior unsecured
notes is two notches below the CFR, reflecting the substantial
secured liabilities ranking ahead of the notes.
RATING OUTLOOK
Moody's expects Ithaca to maintain a prudent approach to capital
allocation, including recourse to active hedging and conservative
shareholder remuneration, so as to sustain solid credit metrics and
liquidity that help withstand the expected decline in production
volumes, rising investment requirements and ongoing fiscal
uncertainty in the UK over the next two to three years. The stable
outlook also reflects Moody's expectation of timely management of
upcoming refinancing needs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The CFR could be upgraded to Ba3 should Ithaca achieve and
maintain: (i) a large reserve base that supports production above
100 kboepd and high single-digit proved reserve life; (ii)
sustained positive free cash flow generation (iii) gross leverage
(Moody's-adjusted) below $15,000 per produced barrel of oil
equivalent (boe) and (iv) a strong liquidity profile.
Conversely, the CFR would be downgraded to B2 should Ithaca fail to
maintain: (i) average daily production sustainably above 50,000
barrels of oil equivalent per day (boepd); (ii) gross leverage
below $25,000/boe; (iii) adherence to its conservative set of
financial policies that support robust underlying cashflow
generation, or (iv) an adequate liquidity position, including the
retention of sufficient borrowing capacity under its reserve-based
lending (RBL) facility as well as timely management of refinancing
needs. In addition, any significant weakening of its parent Delek
Group Ltd.'s (Delek) credit profile could put negative pressure on
Ithaca's ratings.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Independent
Exploration and Production published in December 2022.
COMPANY PROFILE
Ithaca is a UK-focused independent oil and gas exploration and
production (E&P) company. In the 12 months that ended September
2023 (LTM September 2023), it produced on average 73.6 thousand
barrels of oil equivalent per day (kboepd; 67% liquids and 33%
natural gas), generating revenue of $2,418 million and
Moody's-adjusted EBITDA of $1,819 million. Ithaca is listed on the
premium segment of the London Stock Exchange and is majority-owned
by Delek Group Ltd (Delek), an Israeli holding company with primary
exposure to E&P activities in Israel and the UK.
LEASED & TENANTED: GBP400MM Bank Debt Trades at 30% Discount
------------------------------------------------------------
Participations in a syndicated loan under which Leased & Tenanted
Pubs 2 Ltd is a borrower were trading in the secondary market
around 70.5 cents-on-the-dollar during the week ended Friday, Feb.
23, 2024, according to Bloomberg's Evaluated Pricing service data.
The loans traded in the secondary market around 73.7
cents-on-the-dollar the previous week ended Feb. 16.
The GBP400 million facility is a Term loan that is scheduled to
mature on March 6, 2028. The amount is fully drawn and
outstanding.
Leased & Tenanted Pubs 2 Limited provides street, student, and
local community pubs, as well as traditional country inns and
late-night bars. Leased & Tenanted Pubs 2 Limited is an affiliate
of Stonegate Pub Company Limited, which serves customers in the
United Kingdom.
OLLIE QUINN: Bought Out of Administration by OQ Eyewear
-------------------------------------------------------
Business Sale reports that the business and assets of eyewear and
optician chain Ollie Quinn have been acquired out of
administration.
According to Business Sale, administrators sold the business to OQ
Eyewear Limited in a deal that ensures the company's 12 boutique
stores will remain open, with 80 jobs safeguarded.
The sale will see OQ Eyewear Limited acquire Ollie Quinn's business
and assets, including a two-year licence to use the brand name in
the UK, Business Sale states. Ollie Quinn operated from 12 stores
in London, St Albans, Brighton, Bristol, Manchester and Guildford.
The company was established in 2013 as Bailey Nelson London Limited
and rebranded as Ollie Quinn UK Limited in 2017. The firm had a
reputation as a leading UK eyecare and eyewear brand, but the
business suffered as a result of increasing operating costs and the
burden of repayments on loans taken on during the COVID-19
pandemic, Business Sale discloses.
Faced with these mounting cashflow, issues Ollie Quinn's directors
sought advice from BTG Advisory's Robert Insall who undertook a
review of the company's options and ran an accelerated process to
solicit investment for the business, Business Sale relates.
Following the review, Julie Palmer and Andrew Hook of Begbies
Traynor were appointed as joint administrators and oversaw the sale
to OQ Eyewear Limited, Business Sale notes. Prior to the sale,
Kevin McAndrew of Eddisons provided a valuation of the business and
assets, according to Business Sale.
TORQUAY UNITED: On Brink of Administration
------------------------------------------
Ben Butler at Insider Media reports that Torquay United is set to
go into administration after its owner said he was unable to
continue financial support for the club.
According to Insider Media, Clarke Obsorne said "circumstances
beyond his control" during the last five weeks, had forced him into
the move.
In a statement, Mr. Osborne said he had filed on behalf of the
directors, an intention to appoint an administrator to the club and
company, Insider Media relates.
He has stepped down as chairman of the board, Insider Media
discloses.
The Gulls, who are 11th in National League South, had been owned by
Osborne since 2016 after he bought the club from a fan-led
consortium, Insider Media notes.
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week February 19 to February 23, 2024
---------------------------------------------------------------
Coupon Maturity Currency Issuer Price
------ ------ -------- ------ -----
Codere Finance 2 Lu 12.750 11/30/2027 EUR 1.896
Codere Finance 2 Lu 13.625 11/30/2027 USD 2.159
Oscar Properties Ho 11.317 7/5/2024 SEK 3.328
IOG Plc 13.438 9/20/2024 EUR 10.000
Solocal Group 10.925 3/15/2025 EUR 19.998
Tinkoff Bank JSC Vi 11.002 USD 37.000
Codere Finance 2 Lu 13.625 11/30/2027 USD 2.159
Bakkegruppen AS 11.700 2/3/2025 NOK 46.448
Saderea DAC 12.500 11/30/2026 USD 43.563
Bilt Paper BV 10.360 USD 1.433
Caybon Holding AB 10.550 3/3/2025 SEK 46.000
Marginalen Bank Ban 13.068 SEK 45.000
UkrLandFarming PLC 10.875 3/26/2018 USD 3.769
Virgolino de Olivei 10.500 1/28/2018 USD 0.010
YA Holding AB 12.789 12/17/2024 SEK 15.000
Bourbon Corp SA 11.652 EUR 1.374
Avangardco Investme 10.000 10/29/2018 USD 0.108
Privatbank CJSC Via 10.250 1/23/2018 USD 0.966
Ilija Batljan Inves 10.797 SEK 3.925
Offentliga Hus I No 10.924 SEK 44.406
Plusplus Capital Fi 11.000 7/29/2026 EUR 9.807
Virgolino de Olivei 11.750 2/9/2022 USD 0.667
Virgolino de Olivei 10.500 1/28/2018 USD 0.010
Immigon Portfolioab 10.258 EUR 9.813
Privatbank CJSC Via 10.875 2/28/2018 USD 8.648
R-Logitech Finance 10.250 9/26/2027 EUR 17.007
Transcapitalbank JS 10.000 USD 1.264
Goldman Sachs Inter 16.288 3/17/2027 USD 25.610
Sidetur Finance BV 10.000 4/20/2016 USD 0.231
Solocal Group 10.925 3/15/2025 EUR 19.259
Phosphorus Holdco P 10.000 4/1/2019 GBP 0.373
Privatbank CJSC Via 11.000 2/9/2021 USD 1.000
Bilt Paper BV 10.360 USD 1.433
Societe Generale SA 23.510 6/23/2026 USD 7.600
UBS AG/London 16.500 7/22/2024 CHF 25.840
Turkiye Ihracat Kre 12.540 9/14/2028 TRY 48.432
Citigroup Global Ma 25.530 2/18/2025 EUR 3.090
Santander Consumer 10.757 EUR 92.858
Leonteq Securities 12.490 7/10/2024 USD 41.850
Banco Espirito Sant 10.000 12/6/2021 EUR 0.063
Codere Finance 2 Lu 12.750 11/30/2027 EUR 1.896
Credit Suisse AG/Lo 20.000 11/29/2024 USD 15.480
Ukraine Government 11.000 3/24/2037 UAH 26.209
JP Morgan Structure 15.500 11/4/2024 USD 30.480
Russian Railways JS 12.940 2/28/2040 RUB 50.000
Bulgaria Steel Fina 12.000 5/4/2013 EUR 0.216
Ukraine Government 11.000 2/16/2037 UAH 26.402
Virgolino de Olivei 10.875 1/13/2020 USD 36.000
Societe Generale SA 15.840 8/30/2024 USD 14.300
Tonon Luxembourg SA 12.500 5/14/2024 USD 0.010
Sidetur Finance BV 10.000 4/20/2016 USD 0.231
Ukraine Government 11.000 4/20/2037 UAH 25.936
KPNQwest NV 10.000 3/15/2012 EUR 0.899
Societe Generale SA 11.000 7/14/2026 USD 22.450
Russian Railways JS 12.940 2/28/2040 RUB 50.000
Finca Uco Cjsc 13.000 5/30/2025 AMD 0.000
EFG International F 11.120 12/27/2024 EUR 35.920
EFG International F 10.300 8/23/2024 USD 32.740
Ukraine Government 11.570 3/1/2028 UAH 43.743
Converse Bank 10.500 5/22/2024 AMD 0.000
Leonteq Securities 15.000 9/12/2024 USD 40.050
Deutsche Bank AG/Lo 14.900 5/30/2028 TRY 49.196
Erste Group Bank AG 14.500 8/2/2024 EUR 48.050
Societe Generale SA 18.000 5/31/2024 USD 21.000
Basler Kantonalbank 26.000 5/8/2024 CHF 32.940
NTRP Via Interpipe 10.250 8/2/2017 USD 0.750
Lehman Brothers Tre 14.900 9/15/2008 EUR 0.100
Tailwind Energy Chi 12.500 9/27/2019 USD 1.500
Ukraine Government 10.570 5/10/2027 UAH 46.863
UBS AG/London 10.000 3/23/2026 USD 24.230
Societe Generale SA 15.000 9/29/2025 USD 11.300
Ukraine Government 11.000 4/1/2037 UAH 26.173
Deutsche Bank AG/Lo 12.780 3/16/2028 TRY 45.237
Lehman Brothers Tre 11.750 3/1/2010 EUR 0.100
Raiffeisen Switzerl 14.000 3/6/2024 CHF 25.790
Swissquote Bank SA 20.120 6/20/2024 CHF 23.240
Ukraine Government 11.000 4/8/2037 UAH 26.142
Petromena ASA 10.850 11/19/2018 USD 0.622
Bulgaria Steel Fina 12.000 5/4/2013 EUR 0.216
Privatbank CJSC Via 10.875 2/28/2018 USD 8.648
Evocabank CJSC 11.000 9/28/2024 AMD 0.000
PA Resources AB 13.500 3/3/2016 SEK 0.124
Armenian Economy De 10.500 5/4/2025 AMD 0.000
ACBA Bank OJSC 11.500 3/1/2026 AMD 0.000
Leonteq Securities 30.000 3/13/2024 CHF 24.110
Raiffeisen Switzerl 14.000 2/27/2024 CHF 43.060
Leonteq Securities 22.000 2/27/2024 CHF 17.090
Inecobank CJSC 10.000 4/28/2025 AMD 0.000
ACBA Bank OJSC 11.000 12/1/2025 AMD 0.000
Virgolino de Olivei 11.750 2/9/2022 USD 0.667
BNP Paribas SA 10.000 7/26/2027 USD 10.350
Societe Generale SA 20.000 11/28/2025 USD 13.500
Societe Generale SA 18.000 8/1/2024 USD 20.954
Societe Generale SA 20.000 7/21/2026 USD 16.000
UBS AG/London 16.000 3/11/2024 CHF 12.380
UBS AG/London 12.250 3/11/2024 CHF 12.240
UBS AG/London 12.250 3/11/2024 EUR 38.300
UBS AG/London 14.250 4/8/2024 USD 50.250
UBS AG/London 18.000 4/8/2024 CHF 43.450
UBS AG/London 17.400 4/14/2027 SEK 45.930
Landesbank Baden-Wu 12.500 3/22/2024 EUR 28.210
UBS AG/London 10.000 5/14/2024 USD 9.975
Corner Banca SA 13.000 4/3/2024 CHF 31.450
UBS AG/London 13.000 9/30/2024 CHF 21.920
UniCredit Bank GmbH 16.550 8/18/2025 USD 32.140
ObedinenieAgroElita 13.750 5/22/2024 RUB 13.400
UniCredit Bank GmbH 10.700 2/17/2025 EUR 24.580
UniCredit Bank GmbH 10.700 2/3/2025 EUR 24.300
Societe Generale SA 20.000 12/18/2025 USD 28.000
Finca Uco Cjsc 12.500 6/21/2024 AMD 0.000
Sintekom TH OOO 13.000 1/23/2025 RUB 19.290
Landesbank Baden-Wu 11.000 3/22/2024 EUR 30.870
Societe Generale SA 13.010 11/14/2024 USD 27.000
UBS AG/London 18.000 2/26/2024 CHF 50.000
Bank Vontobel AG 20.500 11/4/2024 CHF 47.100
Leonteq Securities 24.000 8/14/2024 CHF 46.130
Bank Vontobel AG 13.500 1/8/2025 CHF 34.700
Bank Vontobel AG 19.000 4/9/2024 CHF 19.200
Leonteq Securities 14.000 7/3/2024 CHF 21.270
Finca Uco Cjsc 12.000 2/10/2025 AMD 0.000
Leonteq Securities 20.000 8/28/2024 CHF 29.460
Leonteq Securities 25.000 12/11/2024 CHF 58.440
Raiffeisen Schweiz 20.000 8/28/2024 CHF 36.950
Vontobel Financial 18.000 9/27/2024 EUR 50.880
Leonteq Securities 22.000 8/28/2024 CHF 47.460
Leonteq Securities 18.000 9/11/2024 CHF 34.780
Leonteq Securities 22.000 8/7/2024 CHF 37.300
Bank Vontobel AG 12.000 9/30/2024 EUR 29.300
Societe Generale SA 18.000 7/3/2024 USD 23.839
Societe Generale SA 16.000 7/3/2024 USD 24.400
Societe Generale SA 16.000 7/3/2024 USD 15.400
Leonteq Securities 27.600 6/26/2024 CHF 36.040
Leonteq Securities 24.000 7/17/2024 CHF 37.160
Leonteq Securities 21.600 6/26/2024 CHF 23.990
Vontobel Financial 11.000 6/28/2024 EUR 49.740
Raiffeisen Switzerl 20.000 6/26/2024 CHF 42.430
BNP Paribas Issuanc 19.000 9/18/2026 EUR 0.820
Societe Generale SA 16.000 7/3/2024 USD 30.000
Societe Generale SA 15.000 7/3/2024 USD 22.500
Leonteq Securities 22.000 9/18/2024 CHF 59.510
Bank Vontobel AG 28.000 9/9/2024 CHF 60.700
Vontobel Financial 19.500 6/28/2024 EUR 48.290
DZ Bank AG Deutsche 12.700 3/22/2024 EUR 48.250
DZ Bank AG Deutsche 22.900 3/22/2024 EUR 49.660
Societe Generale SA 20.000 1/29/2026 USD 34.000
Vontobel Financial 11.000 6/28/2024 EUR 42.920
UBS AG/London 18.750 4/26/2024 CHF 28.580
UniCredit Bank GmbH 16.400 3/22/2024 EUR 47.790
UniCredit Bank GmbH 19.600 3/22/2024 EUR 44.820
UniCredit Bank GmbH 17.000 6/28/2024 EUR 50.490
UniCredit Bank GmbH 14.900 3/22/2024 EUR 49.460
UniCredit Bank GmbH 18.200 6/28/2024 EUR 49.360
UniCredit Bank GmbH 19.500 6/28/2024 EUR 48.360
UniCredit Bank GmbH 17.900 3/22/2024 EUR 46.240
UniCredit Bank GmbH 10.300 9/27/2024 EUR 32.930
UBS AG/London 14.250 7/12/2024 EUR 21.900
HSBC Trinkaus & Bur 23.250 3/22/2024 EUR 43.590
UBS AG/London 19.000 7/12/2024 CHF 42.150
BNP Paribas Issuanc 20.000 9/18/2026 EUR 38.000
UniCredit Bank GmbH 15.900 3/22/2024 EUR 48.580
Swissquote Bank SA 27.700 9/4/2024 CHF 59.270
Swissquote Bank SA 21.060 4/11/2024 CHF 18.380
Societe Generale SA 20.000 9/18/2026 USD 11.750
Swissquote Bank SA 16.380 7/31/2024 CHF 21.330
DZ Bank AG Deutsche 10.300 4/26/2024 EUR 49.030
Bank Vontobel AG 13.000 6/26/2024 CHF 18.500
UBS AG/London 18.750 4/15/2024 CHF 27.500
Raiffeisen Schweiz 18.400 5/2/2024 CHF 29.950
Bank Vontobel AG 23.500 4/29/2024 CHF 28.600
Swissquote Bank SA 13.230 2/27/2024 CHF 42.280
Bank Julius Baer & 14.900 2/28/2024 CHF 41.050
UniCredit Bank GmbH 12.600 6/28/2024 EUR 49.400
UniCredit Bank GmbH 13.500 6/28/2024 EUR 48.020
Leonteq Securities 18.000 2/27/2024 CHF 31.550
Swissquote Bank SA 17.200 2/27/2024 CHF 44.050
Leonteq Securities 19.000 5/24/2024 CHF 17.230
Raiffeisen Switzerl 10.500 7/11/2024 USD 23.400
Vontobel Financial 21.750 3/22/2024 EUR 21.100
Leonteq Securities 26.000 7/31/2024 CHF 44.450
Credit Suisse AG/Lo 29.000 3/28/2024 USD 17.898
Fast Credit Capital 11.500 7/13/2024 AMD 0.000
UniCredit Bank GmbH 10.500 9/23/2024 EUR 32.980
Bank Vontobel AG 13.000 3/18/2024 CHF 24.700
UBS AG/London 16.000 4/19/2024 CHF 29.720
Swissquote Bank SA 26.040 7/17/2024 CHF 47.140
UniCredit Bank GmbH 13.800 3/22/2024 EUR 49.120
Raiffeisen Switzerl 12.300 8/21/2024 CHF 23.590
Leonteq Securities 22.000 4/17/2024 CHF 29.140
Leonteq Securities 26.000 4/17/2024 CHF 28.800
HSBC Trinkaus & Bur 22.750 3/22/2024 EUR 46.550
Bank Julius Baer & 18.400 3/20/2024 CHF 48.900
EFG International F 15.000 7/12/2024 CHF 45.640
Leonteq Securities 20.000 9/26/2024 USD 38.400
Corner Banca SA 18.500 9/23/2024 CHF 28.130
Leonteq Securities 24.000 3/27/2024 CHF 25.880
Leonteq Securities 11.000 5/13/2024 CHF 35.290
DZ Bank AG Deutsche 21.300 3/22/2024 EUR 48.540
Vontobel Financial 21.000 3/22/2024 EUR 37.120
Vontobel Financial 18.500 3/22/2024 EUR 39.950
Vontobel Financial 13.500 3/22/2024 EUR 40.060
Vontobel Financial 22.000 3/22/2024 EUR 35.670
Vontobel Financial 12.000 3/22/2024 EUR 42.970
Bank Vontobel AG 10.000 5/28/2024 CHF 16.700
DZ Bank AG Deutsche 11.000 3/20/2024 EUR 49.580
Leonteq Securities 24.000 5/17/2024 CHF 57.070
BNP Paribas Emissio 16.000 3/21/2024 EUR 48.770
Leonteq Securities 15.000 4/30/2024 CHF 39.070
Vontobel Financial 23.500 3/22/2024 EUR 34.510
Vontobel Financial 25.000 3/22/2024 EUR 33.470
Leonteq Securities 28.000 6/5/2024 CHF 36.890
Bank Vontobel AG 25.500 4/3/2024 CHF 27.600
Raiffeisen Switzerl 16.000 5/22/2024 CHF 26.140
Raiffeisen Switzerl 20.000 5/22/2024 CHF 39.380
Basler Kantonalbank 24.000 3/8/2024 CHF 23.220
Basler Kantonalbank 24.000 7/5/2024 CHF 43.660
Bank Vontobel AG 21.000 2/26/2024 CHF 15.800
Leonteq Securities 27.000 7/24/2024 CHF 25.120
UBS AG/London 26.000 3/22/2024 CHF 14.000
Leonteq Securities 15.000 7/24/2024 CHF 21.320
Leonteq Securities 20.000 7/3/2024 CHF 23.210
Corner Banca SA 15.000 7/3/2024 CHF 48.150
Leonteq Securities 26.000 7/10/2024 CHF 43.310
UniCredit Bank GmbH 14.300 6/28/2024 EUR 46.730
Leonteq Securities 23.000 7/24/2024 CHF 44.160
Raiffeisen Schweiz 20.000 7/24/2024 CHF 51.410
Leonteq Securities 26.000 7/3/2024 CHF 42.960
Vontobel Financial 19.000 6/28/2024 EUR 49.400
DZ Bank AG Deutsche 13.500 6/28/2024 EUR 47.450
Bank Vontobel AG 10.000 8/19/2024 CHF 19.900
Corner Banca SA 23.000 8/21/2024 CHF 46.100
Raiffeisen Schweiz 20.000 4/3/2024 CHF 28.350
UniCredit Bank GmbH 16.800 3/22/2024 EUR 45.150
Vontobel Financial 21.500 3/22/2024 EUR 49.320
Leonteq Securities 28.000 4/11/2024 CHF 27.140
Zurcher Kantonalban 17.400 4/19/2024 USD 47.900
UBS AG/London 18.750 5/31/2024 CHF 35.150
Swissquote Bank SA 26.980 6/5/2024 CHF 41.600
Leonteq Securities 30.000 4/24/2024 CHF 27.730
UniCredit Bank GmbH 15.200 3/22/2024 EUR 46.720
Zurcher Kantonalban 18.000 4/17/2024 CHF 27.220
Raiffeisen Schweiz 20.000 6/12/2024 CHF 43.290
Raiffeisen Switzerl 16.000 6/12/2024 CHF 31.040
Leonteq Securities 22.000 4/24/2024 USD 44.910
Zurcher Kantonalban 24.250 3/28/2024 USD 32.760
Leonteq Securities 20.000 5/2/2024 CHF 27.850
Leonteq Securities 25.000 5/2/2024 CHF 29.590
Zurcher Kantonalban 16.500 3/27/2024 CHF 40.570
Vontobel Financial 20.500 3/22/2024 EUR 46.240
Vontobel Financial 18.500 3/22/2024 EUR 47.530
Leonteq Securities 15.000 4/3/2024 CHF 18.360
Bank Vontobel AG 24.000 3/25/2024 CHF 24.900
Leonteq Securities 24.000 4/3/2024 CHF 25.420
Leonteq Securities 28.000 3/20/2024 CHF 39.990
Leonteq Securities 22.000 4/3/2024 CHF 28.750
Vontobel Financial 16.250 3/22/2024 EUR 23.610
Vontobel Financial 16.000 3/22/2024 EUR 44.920
Vontobel Financial 21.500 3/22/2024 EUR 49.350
Vontobel Financial 12.500 3/22/2024 EUR 40.920
Vontobel Financial 10.000 3/22/2024 EUR 40.710
Vontobel Financial 11.000 3/22/2024 EUR 40.820
Vontobel Financial 23.500 3/22/2024 EUR 33.240
Bank Vontobel AG 20.750 6/24/2024 CHF 27.500
Vontobel Financial 17.000 3/22/2024 EUR 49.000
Vontobel Financial 22.000 3/22/2024 EUR 44.980
UBS AG/London 21.250 4/2/2024 CHF 24.760
DZ Bank AG Deutsche 20.200 3/22/2024 EUR 42.660
Vontobel Financial 20.000 3/22/2024 EUR 49.210
Vontobel Financial 24.500 3/22/2024 EUR 46.470
Leonteq Securities 27.500 5/2/2024 CHF 30.060
Leonteq Securities 27.000 5/30/2024 CHF 21.520
Ameriabank CJSC 10.000 2/20/2025 AMD 0.000
Zurcher Kantonalban 12.500 3/8/2024 CHF 45.510
Raiffeisen Switzerl 20.000 3/13/2024 CHF 22.550
Bank Vontobel AG 15.000 3/11/2024 CHF 42.200
DZ Bank AG Deutsche 23.600 3/22/2024 EUR 38.660
Leonteq Securities 30.000 5/8/2024 CHF 34.180
Bank Vontobel AG 18.500 12/16/2024 CHF 29.800
Bank Vontobel AG 25.000 7/22/2024 USD 32.100
Leonteq Securities 20.000 8/7/2024 CHF 25.210
DZ Bank AG Deutsche 10.250 3/20/2024 EUR 49.550
Leonteq Securities 26.000 5/22/2024 CHF 33.670
Vontobel Financial 17.500 3/22/2024 EUR 47.500
Bank Vontobel AG 12.000 6/10/2024 CHF 38.600
UBS AG/London 18.500 6/14/2024 CHF 33.200
Leonteq Securities 25.000 3/27/2024 CHF 25.630
Leonteq Securities 18.000 3/27/2024 CHF 29.610
Leonteq Securities 14.000 4/30/2024 CHF 17.900
DZ Bank AG Deutsche 16.900 6/28/2024 EUR 43.810
Leonteq Securities 30.000 8/7/2024 CHF 43.780
Leonteq Securities 24.000 7/10/2024 CHF 45.390
Swissquote Bank SA 26.120 7/10/2024 CHF 45.810
Societe Generale SA 26.640 10/30/2025 USD 5.000
Bank Vontobel AG 12.250 6/17/2024 CHF 45.700
Bank Vontobel AG 21.750 3/18/2024 CHF 19.700
National Mortgage C 12.000 3/30/2026 AMD 0.000
Vontobel Financial 10.000 3/22/2024 EUR 40.760
EFG International F 24.000 6/14/2024 CHF 37.740
Citigroup Global Ma 14.650 7/22/2024 HKD 36.510
Armenian Economy De 11.000 10/3/2025 AMD 0.000
Basler Kantonalbank 16.000 6/14/2024 CHF 30.370
DZ Bank AG Deutsche 22.700 3/22/2024 EUR 46.440
DZ Bank AG Deutsche 14.700 3/22/2024 EUR 38.720
Societe Generale SA 21.000 12/26/2025 USD 27.300
Ist Saiberian Petro 14.000 12/28/2024 RUB 14.620
Vontobel Financial 12.000 3/22/2024 EUR 48.490
Leonteq Securities 23.000 3/27/2024 CHF 25.190
Societe Generale Ef 13.250 4/26/2024 EUR 49.590
Zurcher Kantonalban 21.000 5/17/2024 CHF 47.010
Corner Banca SA 24.000 4/3/2024 CHF 27.760
Zurcher Kantonalban 17.000 3/13/2024 CHF 45.410
Corner Banca SA 22.000 3/20/2024 CHF 24.370
Raiffeisen Switzerl 15.000 3/20/2024 CHF 25.470
Raiffeisen Switzerl 20.000 3/20/2024 CHF 24.230
UBS AG/London 17.500 3/15/2024 CHF 41.050
DZ Bank AG Deutsche 10.600 3/22/2024 EUR 42.750
Leonteq Securities 30.000 3/20/2024 CHF 21.260
DZ Bank AG Deutsche 12.500 3/22/2024 EUR 48.160
Leonteq Securities 23.000 3/13/2024 USD 27.400
Zurcher Kantonalban 24.000 3/1/2024 USD 32.200
Swissquote Bank SA 22.760 3/6/2024 CHF 28.060
Leonteq Securities 19.000 6/3/2024 CHF 44.800
Swissquote Bank SA 14.560 3/13/2024 CHF 40.610
Leonteq Securities 26.000 3/13/2024 CHF 18.780
Vontobel Financial 21.000 3/22/2024 EUR 44.870
Raiffeisen Switzerl 15.000 3/6/2024 CHF 42.310
Leonteq Securities 21.000 5/22/2024 USD 26.870
Bank Vontobel AG 22.000 5/31/2024 CHF 28.900
Bank Vontobel AG 13.000 3/4/2024 CHF 41.900
Evocabank CJSC 11.000 9/27/2025 AMD 0.000
Leonteq Securities 25.000 3/6/2024 CHF 20.620
Societe Generale SA 27.300 10/20/2025 USD 11.000
Finca Uco Cjsc 13.000 11/16/2024 AMD 0.000
Ukraine Government 12.500 10/12/2029 UAH 39.606
Ukraine Government 12.500 4/27/2029 UAH 40.915
Ukraine Government 11.580 2/2/2028 UAH 44.147
Lehman Brothers Tre 10.000 6/11/2038 JPY 0.100
Credit Agricole Cor 10.200 12/13/2027 TRY 45.503
Lehman Brothers Tre 14.100 11/12/2008 USD 0.100
Lehman Brothers Tre 16.800 8/21/2009 USD 0.100
Lehman Brothers Tre 13.000 12/14/2012 USD 0.100
Lehman Brothers Tre 11.250 12/31/2008 USD 0.100
Lehman Brothers Tre 11.000 7/4/2011 CHF 0.100
Lehman Brothers Tre 10.442 11/22/2008 CHF 0.100
Lehman Brothers Tre 13.500 6/2/2009 USD 0.100
Lehman Brothers Tre 16.000 12/26/2008 USD 0.100
Lehman Brothers Tre 13.432 1/8/2009 ILS 0.100
Lehman Brothers Tre 16.200 5/14/2009 USD 0.100
Lehman Brothers Tre 16.000 11/9/2008 USD 0.100
Lehman Brothers Tre 10.000 5/22/2009 USD 0.100
Lehman Brothers Tre 15.000 6/4/2009 CHF 0.100
Lehman Brothers Tre 17.000 6/2/2009 USD 0.100
Lehman Brothers Tre 12.000 7/4/2011 EUR 0.100
Lehman Brothers Tre 13.150 10/30/2008 USD 0.100
Lehman Brothers Tre 10.000 10/23/2008 USD 0.100
Lehman Brothers Tre 12.000 7/13/2037 JPY 0.100
BLT Finance BV 12.000 2/10/2015 USD 10.500
Leonteq Securities 16.000 6/20/2024 CHF 31.760
DZ Bank AG Deutsche 12.800 3/22/2024 EUR 44.500
DZ Bank AG Deutsche 11.200 6/28/2024 EUR 47.220
DZ Bank AG Deutsche 21.100 6/28/2024 EUR 46.160
Vontobel Financial 12.500 3/22/2024 EUR 48.700
Vontobel Financial 23.000 3/22/2024 EUR 47.560
Vontobel Financial 25.000 3/22/2024 EUR 44.140
Vontobel Financial 22.000 3/22/2024 EUR 49.500
Vontobel Financial 24.000 3/22/2024 EUR 45.780
Vontobel Financial 23.000 3/22/2024 EUR 44.450
Vontobel Financial 21.500 3/22/2024 EUR 46.280
Vontobel Financial 20.000 3/22/2024 EUR 48.370
Vontobel Financial 17.500 3/22/2024 EUR 43.390
Vontobel Financial 14.500 3/22/2024 EUR 45.840
Vontobel Financial 20.000 3/22/2024 EUR 41.180
Vontobel Financial 24.500 3/22/2024 EUR 42.720
Vontobel Financial 25.000 3/22/2024 EUR 41.890
Ukraine Government 11.110 3/29/2028 UAH 42.424
Lehman Brothers Tre 11.000 6/29/2009 EUR 0.100
Lehman Brothers Tre 10.500 8/9/2010 EUR 0.100
Lehman Brothers Tre 10.000 3/27/2009 USD 0.100
Ukraine Government 11.000 4/24/2037 UAH 28.779
Ukraine Government 11.000 4/23/2037 UAH 26.082
Teksid Aluminum Lux 12.375 7/15/2011 EUR 0.619
Ukraine Government 10.710 4/26/2028 UAH 41.247
Lehman Brothers Tre 11.000 12/20/2017 AUD 0.100
Lehman Brothers Tre 13.000 2/16/2009 CHF 0.100
Lehman Brothers Tre 18.250 10/2/2008 USD 0.100
Lehman Brothers Tre 11.000 12/20/2017 AUD 0.100
Lehman Brothers Tre 11.000 2/16/2009 CHF 0.100
Lehman Brothers Tre 14.900 11/16/2010 EUR 0.100
Lehman Brothers Tre 16.000 10/8/2008 CHF 0.100
Lehman Brothers Tre 11.000 12/20/2017 AUD 0.100
Lehman Brothers Tre 10.000 2/16/2009 CHF 0.100
Virgolino de Olivei 10.875 1/13/2020 USD 36.000
Lehman Brothers Tre 15.000 3/30/2011 EUR 0.100
Lehman Brothers Tre 13.500 11/28/2008 USD 0.100
Ukraine Government 10.360 11/10/2027 UAH 43.108
Lehman Brothers Tre 13.000 7/25/2012 EUR 0.100
Lehman Brothers Tre 11.000 12/19/2011 USD 0.100
UkrLandFarming PLC 10.875 3/26/2018 USD 3.769
Lehman Brothers Tre 10.000 10/22/2008 USD 0.100
Lehman Brothers Tre 10.600 4/22/2014 MXN 0.100
Lehman Brothers Tre 16.000 10/28/2008 USD 0.100
Lehman Brothers Tre 23.300 9/16/2008 USD 0.100
Lehman Brothers Tre 12.400 6/12/2009 USD 0.100
Lehman Brothers Tre 10.000 6/17/2009 USD 0.100
Lehman Brothers Tre 11.000 7/4/2011 USD 0.100
Phosphorus Holdco P 10.000 4/1/2019 GBP 0.373
Tonon Luxembourg SA 12.500 5/14/2024 USD 0.010
*********
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 2024. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
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or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000.
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