/raid1/www/Hosts/bankrupt/TCREUR_Public/240930.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, September 30, 2024, Vol. 25, No. 196
Headlines
B E L G I U M
PROXIMUS SA: S&P Rates New Jr. Subordinated Hybrid Security 'BB+'
F R A N C E
ALMAVIVA DEVELOPPEMENT: Fitch Affirms 'B' IDR, Outlook Stable
G E R M A N Y
APCOA GROUP: Moody's Affirms 'B3' CFR, Outlook Remains Stable
APCOA GROUP: S&P Affirms 'B' LongTerm ICR on Debt Refinancing
CEREBRO HOLDCO: Moody's Affirms 'B3' CFR, Outlook Remains Stable
DYNAMO NEWCO II: Moody's Rates New EUR600MM Secured Notes 'B2'
IHO VERWALTUNGS: Moody's Alters Outlook on 'Ba2' CFR to Negative
G R E E C E
FAGE INT'L: Moody's Alters Outlook on 'Ba3' CFR to Positive
I R E L A N D
AVOCA CLO XI: Moody's Ups Rating on EUR15.8MM Cl. F-R Notes to Ba2
MAN GLG III: S&P Affirms 'B-(sf)' Rating on Class F Notes
RRE 21 LOAN: S&P Assigns BB-(sf) Rating on Class D Notes
SHAMROCK RESIDENTIAL 2022-2: S&P Cuts F-Dfrd Notes Rating to 'B-'
I T A L Y
BRIGNOLE CQ 2024: Fitch Assigns 'BB+sf' Final Rating on Cl. X Notes
GOLDEN BAR 2024-1: Fitch Assigns BB+sf Final Rating on Cl. D Notes
L U X E M B O U R G
ACCORINVEST GROUP: Fitch Rates EUR750MM Secured Notes 'BB'
BELRON GROUP: S&P Cuts ICR to 'BB-' on Dividend Recapitalization
N E T H E R L A N D S
CUPPA BIDCO: S&P Lowers LongTerm ICR to 'CCC+', Outlook Stable
P O L A N D
BANK MILLENNIUM: Fitch Rates EUR500MM Unsec. Notes 'BB+'
S P A I N
OBRASCON HUARTE: Moody's Lowers CFR to Caa2, Outlook Negative
S W E D E N
DOMETIC GROUP: Moody's Alters Outlook on 'Ba2' CFR to Negative
STORSKOGEN GROUP: S&P Affirms 'BB' ICR & Alters Outlook to Stable
S W I T Z E R L A N D
BCP VII JADE: S&P Affirms 'B' LongTerm ICR & Alters Outlook to Pos.
CERDIA HOLDING: Moody's Alters Outlook on 'B2' CFR to Positive
U N I T E D K I N G D O M
ASSURANCE CARE: Opus Restructuring Named as Administrators
BELRON GROUP: Moody's Cuts CFR to 'Ba3' & Alters Outlook to Stable
COGNITA: S&P Assigns 'B-' Rating to New $450MM Term Loan Add-On
EDGE FINCO: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable
ENQUEST PLC: S&P Rates New $160MM Unsec. Fixed-Rate Notes 'B+'
EUROSAIL-UK 2007-1NC: S&P Lowers Class D1a Notes Rating to 'B+'
FYLDE FUNDING 2024-1: S&P Assigns Prelim. B Rating on Class F Debt
HODGKINSON BUILDERS: Opus Restructuring Named as Administrators
INEOS QUATTRO: S&P Gives 'BB' Rating on New Term Loan B Due 2031
ISG CENTRAL: Ernst & Young Named as Administrators
ISG CONSTRUCTION: Ernst & Young Named as Administrators
ISG ENGINEERING: Ernst & Young Named as Administrators
ISG FIT: Ernst & Young Named as Administrators
ISG INTERIOR: Ernst & Young Named as Administrators
ISG JACKSON: Ernst & Young Named as Administrators
ISG RETAIL: Ernst & Young Named as Administrators
ISG UK: Ernst & Young Named as Administrators
KINGSWAY SQUARE: Cowgills Limited Named as Joint Administrators
LERNEN BIDCO: Fitch Hikes LongTerm IDR to 'B', Outlook Stable
MIDLOTHIAN UTILITIES: Interpath Ltd Named as Joint Administrators
PSP ALUMINIUM: Interpath Advisory Named as Administrators
PSP ARCHITECTURAL: Interpath Advisory Named as Administrators
SOMERS TOWN: Buchler Phillips Named as Administrators
SOS COMMUNICATIONS: BDO LLP Named as Administrators
TALKTALK TELECOM: Fitch Lowers LongTerm IDR to 'RD'
TRUST DISTRIBUTION: BDO LLP Named as Joint Administrators
X X X X X X X X
[*] BOND PRICING: For the Week September 23 to September 27, 2024
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B E L G I U M
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PROXIMUS SA: S&P Rates New Jr. Subordinated Hybrid Security 'BB+'
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S&P Global Ratings assigned its 'BB+' issue rating to the proposed
junior subordinated hybrid security to be issued by the Belgian
telecom operator Proximus S.A. (BBB+/Negative/A-2). The transaction
remains subject to market conditions.
The issue rating reflects the proposed security's subordination and
optional interest deferability. S&P considers the proposed security
has intermediate equity content until the first reset date in 2031.
Over this period, the proposed security meets its criteria in terms
of its ability to absorb losses or conserve cash if necessary.
S&P derives its 'BB+' issue rating on the proposed security by
notching down from its 'bbb' stand-alone credit profile on
Proximus. As per S&P's methodology, the two-notch difference
reflects:
-- A one-notch deduction for subordination because S&P's 'BBB+'
long-term issuer credit rating on Proximus is
investment-grade;
and
-- Another one-notch deduction for payment flexibility because
the deferral of interest is at the option of the issuer.
The number of notches deducted to derive at the issue rating on the
proposed security reflects S&P's view that Proximus is relatively
unlikely to defer interest. If S&P views changes, it could change
the issue rating.
S&P said, "We do not add any uplift related to potential
extraordinary government support. This is because we consider that
such support would not apply to the proposed instrument, which is
mainly dedicated to financing Proximus' recent acquisition and
capital expenditure plan.
"Furthermore, to capture our view of the intermediate equity
content of the proposed security, we allocate 50% of the related
payments on this security as a fixed charge and 50% as equivalent
to a common dividend, in line with our hybrid capital methodology.
The 50% treatment of principal and accrued interest also applies to
our adjustment of debt.
"Proximus can redeem the proposed security for cash on any date in
the three months immediately before the first reset date (which we
understand will be no earlier than 5.25 years after issuance), then
annually on every interest payment date. That said, we understand
Proximus will keep the proposed security (or its replacement) as a
permanent layer in its balance sheet. We also note the company's
statement of intent and its commitment to sustainably strengthen
its financial structure due to recent debt funded acquisition and
its investments to accelerate the fiber roll-out.
"Although the proposed security is perpetual, it can be called at
any time for events that we regard as external or remote, such as a
change in tax, accounting, or rating. In addition, Proximus can
call the proposed instrument at any time before the first call date
at a make-whole premium. We understand the company does not intend
to redeem the proposed instrument during this make-whole period. We
therefore do not expect that the proposed instrument will be
redeemed over this time. Accordingly, we do not view the make-whole
redemption as a call feature in our hybrid analysis, even if it is
referred to as a "make-whole call" clause in the documentation.
"We understand that the interest on the proposed security will
increase by 25 basis points (bps) five years after the first reset
date, then by another 75 bps at the second step-up 20 years after
the first reset date, so 15 years after the first step-up date. We
consider any step-up above 25 bps presents an incentive to redeem
the proposed instrument and therefore treat the date of the second
step-up as the proposed instrument's effective maturity date.
Therefore, we are unlikely to recognize the proposed instrument as
having intermediate equity content after its first reset date in
2031 because its economic maturity then falls below 20 years."
Key factors in S&P's assessment of the proposed instrument's
deferability
S&P said, "In our view, Proximus' option to defer payment on the
proposed security is discretionary. This means the company may
elect not to pay accrued interest on an interest payment date
because doing so is not an event of default. However, any deferred
interest payment will have to be settled in cash if Proximus
declares or pays an equity dividend or interest on junior or
equally ranking securities, and if the issuer redeems or
repurchases shares or equally ranking securities. Still, this
condition remains consistent with our methodology because, once the
issuer has settled the deferred amount, it can still choose to
defer on the next interest payment date."
Key factors in S&P's assessment of the proposed instrument's
subordination
The proposed security and the coupons are intended to constitute
Proximus' direct, unsecured, and subordinated obligations, which
rank senior to the company's common shares.
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F R A N C E
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ALMAVIVA DEVELOPPEMENT: Fitch Affirms 'B' IDR, Outlook Stable
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Fitch Ratings has affirmed Almaviva Developpement's Long-Term
Issuer Default Rating (IDR) at 'B' with a Stable Outlook.
The affirmation reflects Almaviva's regionally-focused operations
in France, with a supportive regulatory framework and high barriers
to entry, enabling adequate profitability for the sector. This is
counterbalanced by the group's elevated leverage, with EBITDAR
leverage that Fitch projects at between 6.5x and 7.0x over
2024-2027.
Fitch projects limited rating headroom under current sensitivities.
However, the Stable Outlook reflects its expectations that
Almaviva's EBITDA margins and free cash flow (FCF) will gradually
recover towards historical levels following a weak performance in
2023.
Almaviva Developpment is a clinic operator of mostly leased real
estate, which is owned and managed by Almaviva Patromoine (the
Propco). Almaviva and the PropCo are sister companies owned by the
acquisition vehicle, Almaviva Holding.
Key Rating Drivers
Well-Positioned Regional Operations: Almaviva is well-positioned in
demographically and economically attractive regions of France,
including Greater Paris (51% sales), the southeast (38% sales) and
Corsica (8% sales). Fitch expects Almaviva to maintain its
competitive edge as a regional operator, based on its dense
hospital network, integrated service offering, extended end-to-end
patient care and the ability to recruit and retain medical
practitioners. The group operates in a regulated sector with high
barriers to entry, requiring strong technical and investment
expertise.
Supportive and Evolving Regulation: Fitch believes that Almaviva
benefits from a supportive and stable regulatory environment in
France. Private providers are more cost-efficient than public
providers and are critical for meeting national hospital demand and
service quality. The French government is committed to adequate
sector funding, including to the private sector. Tariff increases
were historically based on three-year tariff agreements, which
increased business visibility and benefited market constituents
including private operators.
However, since the pandemic, tariff increases have been updated
annually, rising by 6.9% in March 2021, 1% in March 2022, 5.2% in
March 2023 (mitigating inflationary pressure) and only 0.3% in
March 2024. The latter increase was smaller than its previous
expectations, but following complaints from the sector, it was
compensated by a decrease in CICE operating taxes as well as other
measures that should ensure more equality of treatment between the
private and public sector constituents. Fitch expects tariff
agreements for the next three years to remain constructive, despite
recent political changes. Government reimbursement and regulation
will ultimately define the trajectory of Almaviva's profitability
Profitability to Align with Peers: Almaviva's Fitch-defined EBITDA
margin declined from 13.1% in 2022 to 10% in 2023 due to
inflationary pressure including high energy costs and wage
increases. However, Fitch expects EBITDA margins to gradually
recover towards 11%-12%, aligned with most direct peers.
Fitch sees limited headroom for structural profitability
improvement beyond 12%, given personnel-intensive operations and a
high share of outsourced or externally acquired products and
services tied to business volumes. Fitch views effective cost
management without compromising service standards as an essential
competitive differentiation and as critical as a stable regulatory
framework.
Low FCF Generation: FCF excluding working capital inflows turned
slightly negative in 2023, on lower profitability and higher
interest rates. Fitch anticipates a gradual improvement in FCF
generation, with it neutral in 2024 and 2025 and turning slightly
positive thereafter, indicating limited headroom at the 'B' IDR.
Persistently negative FCF would signal higher operating risks and
could put pressure on the ratings. Almaviva's FCF generation has
been volatile, disrupted by acquisition-related charges,
pandemic-related cash movements and capital intensity for
equipment, services rollout or real estate development.
Limited Leverage Headroom: Fitch projects that EBITDAR leverage
will remain high at slightly below the negative sensitivity of 7.0x
until 2027, due to tight organic EBITDA expansion. The high
indebtedness is mitigated by Almaviva's defensive operating risk
profile. Fitch estimates that any organic deleveraging achieved on
the back of cost optimisation measures will be used to fund
additional bolt-on acquisitions and development capex.
Bolt-on M&A to Continue: The rating assumes that the French private
hospital market will continue to offer attractive acquisition
opportunities, although the pace has slowed as the bulk of small
and medium-sized acquisitions in the regions have already been made
by leading groups, with four operators controlling over 60% of
French private hospital capacity. Fitch factors in smaller
individual clinic additions in Almaviva's core or adjacent regions,
to the extent these can be accommodated by Almaviva's internal cash
flows and its sponsor's equity co-founding, with limited headroom
for debt-funded M&A.
Derivation Summary
Fitch rates Almaviva under the framework of the ratings navigator
for healthcare providers. The sector peers tend to cluster in
'B'/'BB' range, driven by the traits of their respective regulatory
frameworks influencing the quality of funding and government
healthcare policies, as well as companies' operating profiles,
including scale, degree of service and geographic diversification,
and patient and payor mix. Many sector constituents pursue dynamic
debt-funded M&A strategies given the importance of scale and
limited room for organic return maximisation.
In this context, Almaviva's 'B' IDR reflects its medium-sized
regional operations with lower business scale and narrow geographic
diversification against larger Fitch-rated US-based hospital
operators such as Tenet Healthcare Corp. (B+/Positive), Universal
Health Services, Inc. (BB+/Stable) and Community Health Systems,
Inc. (CCC+). The quality of US regulation with a complex,
politicised and unpredictable environment, varying patient/payor
mix and Medicare/Medicaid payment policies for individual service
lines weigh heavily on their ratings.
Among its European peers, Fitch views the French regulatory regime
as more beneficial for private hospital operators given the
freedom-of-choice principle, mitigating Almaviva's narrow
geographic focus. The Finnish provider of healthcare and social
services, Mehilainen Yhtyma Oy (B/Stable), is exposed to more
restrictions, particularly based on the recently amended healthcare
reform limiting the participation of private healthcare operators
in certain public-pay services.
The private mental care and rehabilitation specialist Median B.V.
(B-/Stable) operating in Germany and the UK has slightly higher
leverage and lower profitability than Almaviva. German hospital
operator Schoen Klinik SE (B+/Stable) has lower EBITDAR leverage at
about 4.5x and more prudent financial policy, family ownership and
owns a higher portion of its facilities.
All 'B' healthcare service providers show weak credit metrics
expressed in highly leveraged balance sheets following a history of
debt-funded acquisitions, with EBITDAR leverage of 6.0x-7.0x and
tight operating EBITDAR fixed charge coverage of 1.5x-2.0x.
Given the proximity of hospital services to lab-testing service
companies, which Fitch also regards as social infrastructure
assets, and which are subject to a similar triennial tariff
agreement in France, Fitch has compared Almaviva's 'B' rating with
Laboratoire Eimer Selas (B/Negative) and Inovie Group (B/Negative).
Both lab-testing companies have higher leverage of 8.0x, given
their stronger operating and cash flow margins and non-cyclical
revenue pattern with high visibility due to sector regulation.
These features justify a 0.5x higher leverage tolerance for their
'B' IDRs compared with Almaviva.
Key Assumptions
Fitch's Key Assumptions Within its Rating Case for the Issuer
- Organic sales growth to moderate at about 1.5% in 2024 and about
2% over 2025-2027.
- Fitch-estimated acquisitions of EUR20 million in 2024 and EUR30
million annually thereafter.
- EBITDA margin gradually increasing from 10% in 2023 towards 12%
in 2027.
- Operating leases about 8.2% of sales.
- Capex at 7.5% in 2024 and between 5.0% and 5.5% afterwards
- No dividends.
Recovery Analysis
Key Recovery Rating Assumptions
The recovery analysis assumes that Almaviva would be reorganised as
a going concern (GC) in bankruptcy rather than liquidated, given
that the company's main asset is embedded in its brand and its
established position as one of the leading private hospital
operators.
Fitch has assumed a 10% administrative claim. Fitch estimates
Almaviva's GC EBITDA assumption at about EUR50 million. The GC
EBITDA is based on a stressed scenario reflecting adverse
regulatory changes, the company's inability to manage costs or
retain medical practitioners leading to deteriorating quality of
care.
An enterprise value (EV)/EBITDA multiple of 6.0x is applied to the
GC EBITDA to calculate a post-reorganisation EV. The choice of this
multiple is based on precedent M&A EV/EBITDA for peers of 10x-15x,
with recent activity at the upper end, and is in line with European
sector peers' multiples.
The multiple is lower than Mehilainen Yhtyma Oy's 6.5x, given the
latter's national leadership in Finland with increasing
diversification abroad, broader diversification across healthcare
and social care service lines and larger scale, whereas its
regulatory regime is less supportive for private sector operators
in Finland.
After deducting 10% for administrative claims, its waterfall
analysis generates a ranked recovery for Almaviva's senior secured
TLB in the 'RR3' category, leading to a 'B+' instrument rating,
which includes the pari passu ranking revolving credit facility
(RCF) of EUR80 million that Fitch assumes will be fully drawn prior
to distress. The senior secured term loan B (TLB) and RCF rank
after Almaviva's structurally super senior bank loans of about
EUR14 million. Fitch also assumes the financial leases of EUR40
million at the Almaviva level will remain available during and
post-distress and will not crystallise as a debt obligation.
The above results in a waterfall generated recovery computation
output percentage of 69% based on current metrics and assumptions,
the same as in the last review.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Successful implementation of Almaviva's business plan, including
effective cost management, leading to sustained EBITDA margin
growth and positive FCF.
- A more conservative financial policy reflected in EBITDAR
leverage of below 5.0x on a sustained basis.
- EBITDAR fixed charge coverage above 2.0x.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Adverse regulatory changes or challenges in the strategy
implementation, with EBITDA margins declining to below 10%.
- Neutral to negative FCF margins on a sustained basis.
- Tightening liquidity headroom with increased use of the company's
revolving credit facility (RCF).
- EBITDAR leverage above 7.0x on a sustained basis.
- Diminishing financial flexibility reflected in EBITDAR fixed
charge coverage weakening below 1.5x.
Liquidity and Debt Structure
Satisfactory Liquidity: Fitch regards Almaviva's liquidity as
satisfactory. Fitch expects negative FCF generation in 2024 due to
lower profitability and high capex plans. Ambitious capex and M&A
plans could put liquidity under pressure.
In its liquidity analysis, Fitch has excluded EUR20 million from
cash, which Fitch deems to be restricted for daily operations and
therefore not available for debt service. The EUR80 million RCF is
currently undrawn.
The debt structure is concentrated. However, the company has
long-dated maturities with the RCF and TLB coming due in 2027 and
2028, respectively.
Issuer Profile
Almaviva is the fourth-largest French private hospital group
operating 43 clinics in three French regions,
Île-de-France/Greater Paris area (51% of sales),
Provence-Alpes-Côte d'Azur in the southeast (38% sales) and
Corsica (8% sales). The group also owns a 56.7% stake in a
proportionally consolidated joint venture in Canada (3% sales),
after increasing its stake from 33% in June 2022.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Almaviva Developpement has an ESG Relevance Score of '4' for
Exposure to Social Impacts due to its operating environment being
subject to sector regulation, as well as budgetary and pricing
policies adopted by the French government. Rising healthcare costs
expose private hospital operators to the risk of adverse regulatory
changes, which could constrain companies' ability to maintain
operating profitability and cash flows. This has a negative impact
on the credit profile, and is relevant to the rating in conjunction
with other factors.
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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Almaviva Developpement LT IDR B Affirmed B
senior secured LT B+ Affirmed RR3 B+
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G E R M A N Y
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APCOA GROUP: Moody's Affirms 'B3' CFR, Outlook Remains Stable
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Moody's Ratings has affirmed APCOA Group GmbH's (Apcoa or the
company) B3 corporate family rating and its B3-PD probability of
default rating. Moody's have also affirmed the B3 instrument rating
on the EUR320 million existing backed senior secured fixed notes
and the EUR365 million backed senior secured floating rate notes
both due in 2027. Concurrently, Moody's assigned a B3 rating to the
proposed EUR685 million backed senior secured debt to be split
between fixed rate notes and floating rate notes both due in 2031.
The outlook remains stable.
The proceeds from the proposed issuance along with cash on balance
sheet will be used to repay the EUR320 million of existing backed
senior secured fixed notes due in 2027, the EUR365 million of
backed senior secured floating rate notes due in 2027, as well as
transaction fees and related costs.
Moody's expect the existing backed senior secured fixed and
floating rate notes to be repaid upon closing of the refinancing
transaction. As a result, Moody's will withdraw the existing B3
rating on these instruments later.
RATINGS RATIONALE
Apcoa's good operating performance continued in 2023 with revenue
growing by 12% year-on-year while Moody's adjusted EBITDA also grew
by 11%, with this positive trend continuing as of the last twelve
months (LTM) ending June 30, 2024. The growth has been driven by
increased frequency of car park use, higher pricing, contribution
from new business wins and the roll out of Urban Hubs initiative
where Apcoa re-uses parking spaces for alternative uses such as car
rental, electric vehicle charging, Amazon package collection etc.
This operating momentum has helped in reducing Moody's adjusted
gross debt/EBITDA (leverage) to 6.8x as of LTM June 2024 compared
to 7.3x as of 2022. Despite the improvement in leverage, interest
coverage as defined by EBITA/Interest expense remains weak at 0.8x
while free cash flow (FCF)/debt is negative at 1.3% as of LTM June
2024 due to higher interest expense and elevated level of capex.
Moody's expect Apcoa to continue growing based on volume growth,
price gains, new business wins and digital enhancements. Moody's
estimate the company to generate revenue of around EUR966 million
to EUR1 billion and Moody's adjusted EBITDA of EUR250 million to
EUR280 million in 2024 and 2025 respectively. This will result in
Moody's adjusted leverage of 6.7x by the end of 2024 and 6.2x in
2025 while Moody's adjusted EBITA/interest expense will remain
between 0.8-1x. Moody's adjusted FCF/debt is expected to remain
negative for the same period between -2% to -1% due to high
interest payments and capex investments.
The rating is weakly positioned and the company would need to meet
its management case and improve FCF generation to be more
comfortably positioned at B3.
The company's private equity sponsor Strategic Value Partners (SVP)
is the majority owner with a 100% stake, after buying out
Centerbridge Partners' 83% stake in February 2024. Moody's expect
SVP to be a long term investor who will continue to support the
development of Apcoa's business by identifying further growth
opportunities and cost savings and not extract dividends at least
in the next 12-18 months.
LIQUIDITY
Moody's view Apcoa's liquidity as adequate. The proforma cash
balance is around EUR84 million with EUR74 million of revolving
credit facility (RCF) available following the refinancing
transaction. The RCF has a maximum super senior leverage covenant
of 1.5x if the RCF is utilized by more than 40%. The nearest debt
maturity is the RCF maturing in March 2031. The notes mature in
September 2031.
RATIONALE FOR STABLE OUTLOOK
The stable outlook assumes that Apcoa's credit metrics will
gradually improve as demand and earnings continues to improve and
this will lead to deleveraging towards 6x by 2025 although free
cash flow remains weak. The outlook incorporates Moody's assumption
that management will not embark on any debt-funded acquisitions or
dividend recapitalization during this period.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Over time, Moody's could upgrade Apcoa's ratings if
Moody's-adjusted debt/EBITDA is sustainably below 6x,
EBITA/interest expense improves towards 1.5x and the company
maintains a solid liquidity profile including positive
Moody's-adjusted FCF to debt towards 5%.
Ratings could be downgraded if operating performance deteriorates
such that its Moody's-adjusted debt/EBITDA remains sustainably
above 7x, EBITA/interest expense is sustainably below 1x, FCF to
debt remains negative and liquidity weakens.
STRUCTURAL CONSIDERATIONS
The senior secured notes are rated B3, at the same level as the
CFR, reflecting the comparatively small amount of super senior RCF
and upstream guarantees from operating companies. The senior
secured notes and the RCF are secured by shares, bank accounts and
intragroup receivables of material subsidiaries. However, the RCF
will rank ahead of the notes in an enforcement scenario under the
provisions of the intercreditor agreement. Moody's typically view
debt with this type of security package to be akin to unsecured
debt. The notes and the RCF benefit from upstream guarantees from
operating companies accounting for at least 80% of consolidated
EBITDA.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
COMPANY PROFILE
Apcoa is a leading European parking operator, with revenue of
around EUR924 million and Moody's-adjusted EBITDA of EUR243 million
as of LTM June 2024. Apcoa manages around 1.5 million car parking
spaces across about 12,000 sites in 12 countries as of June 2024.
The group mainly provides parking management services to a broad
client base, including airports and railways, shopping centres,
city centres, hotels and hospitals, as well as trade fairs and
events. Headquartered in Germany, the company is 100% owned by
Strategic Value Partners since February 2024.
APCOA GROUP: S&P Affirms 'B' LongTerm ICR on Debt Refinancing
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S&P Global Ratings affirmed its 'B' long-term issuer credit rating
on Germany-based car park operator and parking infrastructure
services provider APCOA Group GmbH. S&P also assigned its 'B' issue
level and '3' recovery rating to the proposed EUR685 million senior
secured notes. The recovery rating of '3' reflects its expectation
of a meaningful recovery (50%-70%; rounded estimate: 50%) in the
event of a payment default.
The stable outlook indicates that S&P expects APCOA will deliver
solid revenue growth of 5%-7% in 2024 and 2025 along with
profitability enhancement from higher volumes, pricing initiatives,
and cost savings. This will drive a reduction in leverage, absent
material debt-funded acquisitions or shareholder returns, and
growing FOCF.
S&P said, "The affirmation reflects the leverage neutral
refinancing transaction and our expectation of solid revenue growth
and improvement in profitability that will support deleveraging and
cash flow generation. APCOA Group GmbH is raising EUR685 million of
new notes due 2031 to refinance its existing EUR685 million senior
secured debt due 2027. The transaction is leverage neutral for the
company. We expect APCOA to delever in 2025 with debt to EBITDA of
about 6.2x and FFO to debt of about 9.0%, after a spike in 2024 to
debt to EBITDA of 7.2x and FFO to debt of about 7.0% primarily due
to nonrecurring expenses. We forecast a growth in FOCF to about
EUR130 million in 2025, from EUR85 million in 2024, due to EBITDA
growth, stable capital expenditure (capex) of EUR35 million-EUR40
million, and structurally negative working capital. APCOA has
meaningful lease payments, however, that we forecast about EUR185
million-EUR195 million in 2024-2025. In our base case, FOCF after
leases is negative until 2025, before turning mildly positive as
revenue maximization and cost optimization initiatives bear fruit.
This constrains the rating.
"We expect healthy revenue growth in 2024 and 2025. We forecast
revenue growth of 7.6% in 2024 and 5.4% in 2025. Continued, albeit
declining, inflation-driven price increases across all markets will
underpin this, along with increasing contributions from new
initiatives like Urban Hubs, the continued rollout of automatic
number plate recognition (ANPR) systems, electronic vehicle (EV)
charging stations, and new contracts, mostly from first-time
outsourcing. Several initiatives--like using analytics to deploy
new pricing tariffs, dynamic pricing, and introducing short-term
parking fees in the currently managed unpaid car parks--will also
support revenue growth in 2025.
"We forecast EBITDA margin growth from a low point in 2024. APCOA's
profitability has eroded in recent years due to inflationary
pressures on its cost base. In the first half of 2024, APCOA's
reported EBITDA margin declined to 23.9% from 27.9% in the same
period in 2023. This was mainly due to several one-off costs
associated with the acquisition by SVP including reorganization and
restructuring; hiring external advisors; investment in IT and
digitalization; consulting and legal fees related to sale of
operations in Belgium and other investments in business totaling
about EUR12 million; and increasing personal costs to a smaller
extent. For 2024, we forecast an S&P Global Ratings-adjusted EBITDA
margin of 24.6%, somewhat higher than in the first half due to the
seasonality of the business. We forecast the one-off costs to
reduce meaningfully in 2025 to about EUR4 million (compared to
about EUR22 million in 2024) resulting in margins recovering to
27.4% in 2025. EBITDA margin expansion will also be underpinned by
an easing of inflationary pressures and various costs saving
measures such as material procurement and centralization of certain
back-office functions. The roll out of ANPR across all markets will
support revenue growth along with reduction in costs.
"The rating considers APCOA's private-equity ownership by SVP and
its tolerance for high leverage. As part of the transaction, the
size of the RCF has been increased to EUR110 million from EUR80
million, providing additional liquidity and flexibility to pursue
bolt-on acquisitions. While we think that, under SVP's ownership,
the company will likely make acquisitions, we understand that the
financial sponsor's intention is not to exceed the opening leverage
of 6.1x (as defined by the company). We have not factored any
additional dividend payments or merger and acquisition activity
into our base case.
"The stable outlook indicates that we expect APCOA will deliver
solid revenue growth of 5%-7% in 2024 and 2025 along with margins
recovery to about 27% from higher volumes, pricing initiatives, and
cost savings. This will drive a reduction in leverage, absent
material debt-funded acquisitions or shareholder returns, and
increasing FOCF."
S&P could lower the rating if the company's operating performance
deteriorates due to competitive pressures or volume declines, and
cost saving initiatives do not mitigate this, or if it adopts a
more aggressive financial policy with material debt-funded
acquisitions or shareholder returns, such that:
-- S&P Global Ratings-adjusted FOCF turns negative for a sustained
period;
-- The liquidity position tightens, and covenant headroom reduces;
or
-- The company's leverage deteriorates significantly.
S&P said, "We could consider an upgrade if the company strengthens
its revenue and EBITDA margins such that leverage declines to about
6.5x, FFO to debt approaches 10%, the company generates positive
FOCF after leases along with company and shareholders' financial
policy that supports those credit metrics over time.
"Governance is a moderately negative consideration. Our assessment
of the company's financial risk profile as highly leveraged
reflects corporate decision-making that prioritizes the interests
of the controlling owners, in line with our view of the majority of
rated entities owned by private-equity sponsors. Our assessment
also reflects generally finite holding periods and a focus on
maximizing shareholder returns. Environmental factors are neutral
for our rating analysis. The company is taking advantage of the
decarbonization opportunities and had about 3,000 operational
alternating current (AC) chargers as of March 31, 2024, with signed
contracts for another 1,000 chargers. We think that the move toward
decarbonization could also pose a risk to carparks if restrictions
on certain cars parking in city centers and governments' promotion
of public transport were to materially reduce overall carpark
volumes."
CEREBRO HOLDCO: Moody's Affirms 'B3' CFR, Outlook Remains Stable
----------------------------------------------------------------
Moody's Ratings has affirmed the B3 long-term corporate family
rating and the B3-PD probability of default rating of Cerebro
HoldCo GmbH (Neuraxpharm or the company). At the same time, Moody's
affirmed the B3 instrument ratings of the senior secured bank
credit facilities, including the revolving credit facility (RCF)
and the term loan B (TLB), maturing in 2027, and borrowed by
Neuraxpharm Arzneimittel GmbH. The outlook remains stable for both
entities.
RATINGS RATIONALE
The rating affirmation with stable outlook reflects Moody's
expectations that, over the next 12-18 months, Neuraxpharm's key
credit metrics will improve to levels more commensurate with its B3
rating. In particular, Moody's forecast that the company's
Moody's-adjusted gross leverage will decline below 7x and its
Moody's-adjusted free cash flow (FCF) generation turn positive
during 2025.
Due to several significant transactions in 2023, there has been a
temporary delay in deleveraging and weaker FCF generation. These
transactions include i) the partly debt-funded acquisition of a
portfolio of products from Sanofi, ii) the disposal of Inke, its
active pharmaceutical ingredients (APIs) subsidiary, and iii) the
in-licensing deal to commercialise Briumvi in Europe, which also
requires significant investment to ramp up its commercialisation.
This will result in a temporary increase in Moody's-adjusted gross
leverage in 2024 to around 7.5x. More positively, Neuraxpharm's
interest coverage is adequate with a Moody's-adjusted EBITA to
interest expense at around 1.9x for the last twelve months to June
2024, and the company's liquidity is good. These are mitigating
factors that support the stable outlook.
The rating action also reflects the company's good performance and
market positioning within the central nervous system (CNS) market
in Europe; an attractive product pipeline, with prospects of
further organic growth over the next 12-18 months, also supported
by recent acquisitions and licensing deals; its well-balanced
geographical diversification across Europe; and good profitability
margins.
Moody's expect the company's revenue growth to be in the
mid-to-high single-digit range in percentage terms, while Moody's
expect the company's Moody's-adjusted EBITDA to grow to around
EUR130-135 million, over the next 12-18 months, which will drive a
reduction of its Moody's-adjusted gross leverage to below 7x. This
will be primarily driven by continued volume growth and market
penetration across key countries such as Germany, Spain and the UK,
and recently set up affiliates in Mexico and Brazil. Moody's also
expect a continued focus on expanding the commercialisation of
Briumvi, which Neuraxpharm launched in Germany in February 2024 and
in Spain in September 2024, and is preparing for a gradual launch
in other European countries. Moody's also assume that the
out-of-stock challenges that Neuraxpharm is facing in some of the
company's products will normalise in early 2025.
The rating also factors in the company's high business
concentration in the CNS segment; its overall modest size; and
acquisition-related event risk because of the company's external
growth strategy, which has included debt-funded acquisitions in the
past.
RATING OUTLOOK
The stable rating outlook reflects Moody's assumption of a
continued good operating performance that will support earnings
growth and organic leverage reduction, with the company's
Moody's-adjusted gross leverage declining below 7x over the next
12-18 months, and an improving cash generation. The outlook also
reflects Moody's assumption that Neuraxpharm will not undertake
large debt-financed acquisitions or shareholder distributions.
LIQUIDITY
Neuraxpharm's liquidity is good, bolstered by a cash balance of
EUR167 million as of June 30, 2024. Moody's anticipate that the
company will use a significant portion of its cash in the second
half of 2024 due to working capital needs and capital investments
associated with the Sanofi and Briumvi transactions. Consequently,
Moody's expect a negative Moody's-adjusted FCF for 2024, which
should improve to around EUR10 million starting in 2025.
Additionally, liquidity is supported by the EUR125 million RCF
which remains fully undrawn, along with substantial capacity within
its springing financial covenant, which is based on a net leverage
ratio set at 10.44x and is only tested when the RCF is drawn by
more than 40%. The company's next significant maturities are the
RCF due in June 2027 and the term loan due in December 2027.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating momentum could develop if Neuraxpharm's good
operating performance continues and the company successfully rolls
out its new pipeline products, allowing its Moody's-adjusted gross
leverage to decline below 5.5x on a sustained basis; its
Moody's-adjusted FCF/debt increases above 5% on a sustained basis;
and its Moody's-adjusted EBITA to interest expense increases above
2x on a sustained basis.
Downward rating pressure could develop if Neuraxpharm's
deleveraging profile does not materialise, keeping its
Moody's-adjusted gross debt/EBITDA above 7x over the next 12-18
months; if the company generates negative Moody's-adjusted FCF on a
sustained basis, leading to a deterioration in its liquidity; if
its Moody's-adjusted EBITA to interest expense declines towards 1x;
or the company undertakes large debt-financed acquisitions or
shareholder distributions.
STRUCTURAL CONSIDERATIONS
The B3-PD PDR, in line with the CFR, reflects Moody's assumption of
a 50% family recovery rate, typical for covenant-lite secured loan
structures. The B3 rating of the EUR875 million senior secured TLB
and the EUR125 million senior secured RCF reflects their pari passu
ranking, with upstream guarantees from material subsidiaries and
collateral comprising shares, financial securities accounts, bank
accounts and intragroup receivables pledges.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Pharmaceuticals
published in November 2021.
COMPANY PROFILE
Neuraxpharm was founded in 2016 following the combination of two
pharmaceutical groups, Invent Farma and Neuraxpharm. Since then,
the company has transformed into a pan-European specialist in CNS
disorders with a presence in more than 40 countries. Neuraxpharm
generated net sales of around EUR458 million and company-adjusted
EBITDA of around EUR148 million in the last twelve months to June
2024, of which more than 90% came from CNS-related products. The
company has been owned by Permira since December 2020.
DYNAMO NEWCO II: Moody's Rates New EUR600MM Secured Notes 'B2'
--------------------------------------------------------------
Moody's Ratings has assigned a B2 rating to the proposed EUR600
million backed senior secured notes to be issued by Dynamo NewCo II
GmbH, a subsidiary of Dynamo Midco B.V. (Innomotics).
RATINGS RATIONALE
The proposed backed senior secured notes represents the second leg
of the around EUR1.8 billion financing package for the carve-out of
Siemens Aktiengesellschaft's (Aa3 stable) motors and drives
business Innomotics. On September 17, 2024, Moody's assigned a B2
long-term corporate family rating (CFR) and a B2-PD probability of
default rating (PDR) to Innomotics as well as B2 ratings to the
backed senior secured term loans B totaling around EUR1.2 billion
equivalent issued by Dynamo NewCo II GmbH and Dynamo US Bidco Inc.,
the first leg of the financing package. These ratings remain
unaffected, because they incorporated Moody's assumption of the
successful execution of the second leg of the financing package.
The stable outlook on Innomotics as well its subsidiaries remains
also unaffected.
The assigned B2 rating to the proposed backed senior secured notes
reflects their pari passu ranking with the EUR1.2 billion
equivalent backed senior secured term loans B maturing in 2031, the
EUR400 million backed senior secured revolving credit facility and
the at least EUR300 million backed senior secured guarantee
facility, all rated B2 as well.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's could consider upgrading Innomotics' CFR with evidence of a
meaningful improvement in its margins, leading to Moody's-adjusted
gross debt/EBITDA below 5.0x and Moody's-adjusted EBITA/interest
above 2.0x on a sustained basis. Maintenance of adequate liquidity,
with ongoing positive FCF, could also support an upgrade.
Moody's could consider a downgrade of the rating if the company
fails to improve EBITDA margins to double digits, debt/EBITDA
remains sustainably above 6.0x, interest to EBITA cover falls
sustainably below 1.5x, Innomotics free cash flow turns negative
and/or its liquidity deteriorates.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Manufacturing
published in September 2021.
COMPANY PROFILE
Innomotics is a leading manufacturer of electrical motors and
drives and reported revenues of about EUR3.2 billion in fiscal 2023
ending on September 30, 2023. The company is headquartered in
Nürnberg, Germany, and operates 17 manufacturing facilities
globally. The company is owned by funds controlled by KPS Capital
Partners, LP and has been carved out from Siemens
Aktiengesellschaft.
IHO VERWALTUNGS: Moody's Alters Outlook on 'Ba2' CFR to Negative
----------------------------------------------------------------
Moody's Ratings has affirmed the Ba2 long term corporate family
rating, the Ba2 senior secured instrument ratings and the Ba2-PD
probability of default rating of IHO Verwaltungs GmbH ("IHO-V" or
"group"). Concurrently, Moody's have changed the outlook for the
entity to negative from stable.
"The outlook change to negative reflects the currently high market
value based net leverage and relatively weak interest coverage,
which could lead to a rating downgrade over the next 12-18 months",
said Matthias Heck, a Moody's Ratings Vice President – Senior
Credit Officer and Lead Analyst for IHO-V. "The affirmation
reflects the company's good liquidity, which helps to manage
short-term share price volatility of the key assets", added Mr.
Heck.
RATINGS RATIONALE
The outlook change to negative reflects the continued weakness of
the share prices of Continental AG (Continental) and Schaeffler AG
(Schaeffler), which are IHO-V's main assets. The share price
declines of around 25%-30% each since the beginning of this year
reflect a tougher operating environment in the automotive industry,
resulting reduction in earnings guidance of Schaeffler AG in July
as well as a major product recall of Continental's integrated brake
systems delivered to Bayerische Motorenwerke AG. As of September
18, 2024, IHO-V's market value based net leverage (MVL) amounted to
51%, which is well above the range of 30%-40%, which is appropriate
for the Ba2 rating. While temporal fluctuations of the MVL are
acceptable and can be managed thanks to IHO-V's good liquidity, the
rating could be downgraded if MVL remained high for a prolonged
period of time.
The group's standalone interest coverage of about 2.0x funds from
operations (FFO, defined as dividends received minus operating
costs) to interest expense as of June 30, 2024 remains just at the
minimum of Moody's expectation for the Ba2. While prospects for
higher dividend collections appear to be muted in the current
sector environment, the interest cover could weaken if Continental
and/or Schaeffler had to reduce dividends or interest expense
increased once the company refinanced existing debt maturities.
The affirmation of the Ba2 rating reflects as strengths IHO-V's
large size; ownership of sizeable stakes in its high-quality assets
Schaeffler AG (SAG, Baa3 stable, 75%) and Continental AG (Baa2
stable, 36&), which are both publicly listed and rated
investment-grade, and Vitesco Technologies Group AG (Vitesco,
39.9%); consolidated leverage at an adequate level for the Ba2
rating; and good liquidity.
Additional factors constraining the rating include some
concentration risk from IHO-V's dependence on dividends from its
subsidiaries, which are mostly active in the cyclical automotive
industry; a lack of clearly defined financial policies aimed at
preserving a conservative capital structure to offset the
concentration risk; limited reporting at IHO-V's standalone level;
and Moody's expectation of increasing cash needs by its parent over
the next two years.
LIQUIDITY
Moody's continue to regard IHO-V's liquidity as strong. Supporting
this assessment are the group's available internal cash sources,
including cash and cash equivalents of around EUR50 million at the
end of June 2024, and its undrawn EUR800 million revolving credit
facility due 2026.
These funds together with expected dividend collections in 2025
significantly exceed the group's short-term cash needs, including
regular holding costs and taxes, and expected interest payments of
more than EUR180 million next year. IHO-V's cash needs further
comprise expected payments on an intercompany loan to its direct
parent IHO Beteiligungs GmbH (IHO-B; EUR263 million outstanding as
of June 2024) for tax obligations at the ultimate parent level.
In terms of covenant compliance, there is currently significant
capacity under the group's leverage covenant, and Moody's expect
the capacity to remain adequate over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade IHO-V's ratings if its (1) market
value-based net leverage sustainably exceeds 40%; (2) FFO interest
cover deteriorates below 2.0x on a sustainable basis; (3) Moody's
adjusted debt/EBITDA remains above 3.0x and Moody's adjusted EBITA
margin fails to recover to above 8% for a prolonged period of time,
both based on INA-Holding Schaeffler GmbH & Co. KG statements that
fully consolidate Schaeffler AG and Continental AG; or (4)
liquidity deteriorates.
An upgrade of IHO-V's ratings would require (1) a market
value-based net leverage of 30% or less, and (2) FFO interest cover
above 2.5x on a sustainable basis. An upgrade would also require
(3) Moody's adjusted debt/EBITDA to be sustained below 2.5x and
Moody's adjusted EBITA margin to be improved to around 10%, both
based on INA-Holding Schaeffler GmbH & Co. KG's financial
statements that fully consolidate Schaeffler AG and Continental AG.
An upgrade would also require (4) improved reporting at IHO-V
level.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
COMPANY PROFILE
Headquartered in Herzogenaurach, Germany, IHO Verwaltungs GmbH
(IHO-V) is a holding company that owns 75% of the share capital in
SAG, and 36% of Continental and 39.9% of Vitesco. These assets are
all leading automotive suppliers in Europe. IHO-V is ultimately
owned through a holding structure by two members of the Schaeffler
family.
===========
G R E E C E
===========
FAGE INT'L: Moody's Alters Outlook on 'Ba3' CFR to Positive
-----------------------------------------------------------
Moody's Ratings has affirmed the Ba3 Corporate Family Ratings and
the Ba3-PD Probability of Default Rating of FAGE International
S.A.'s (FAGE), an international family-owned manufacturer of Greek
yoghurt. Concurrently, Moody's have affirmed the Ba3 rating of the
backed senior unsecured notes due 2026, jointly issued by FAGE
International S.A. and Fage USA Dairy Industry, Inc. (FAGE USA), a
subsidiary of FAGE. The outlook has been changed to positive from
stable.
RATINGS RATIONALE
The change in the outlook reflects the continued reduction in
leverage following the early redemption in August 2024 of a total
$60 million of the 5.625% backed senior unsecured notes due 2026,
funded with the $78 million of cash balance as of June 2024. This
adds to the two tender offers on the notes completed in 2023 for a
total amount of $183.4 million. As of end of August 2024, the
remaining outstanding notes amount to only $44 million and Moody's
expect these to be paid down in 2025. As a result, the company will
be almost debt free within the next 12-18 months.
The debt reduction demonstrates a reduced appetite for leverage
which is a Financial Strategy and Risk Management consideration
under Moody's General Principles for Assessing Environmental,
Social and Governance Risks methodology. These governance
considerations have been a key driver of the rating action.
The rating action also factors the company's continued solid
operating performance and positive free cash flow generation,
driven by robust demand growth in its primary markets. In 2023,
FAGE revenue increased 13.9%, as a result of both price increases
and volume growth. In addition, the decrease in milk prices
supported the expansion of gross margin, which rose to 46.4% from
31.1% in 2022. As a result, FAGE's EBITDA improved to $158 million
in 2023 from $85 million in the previous year. Operating
performance remained strong in the first half 2024, supported by
stronger volumes, partially offset by a modest decline in the
average selling price. Sales improved by 15.6% to $358 million,
while EBITDA reached $92.0 million.
However, during the second quarter, FAGE began to experience a rise
in milk prices, a trend that Moody's expect to continue in the
second half of 2024. As result, Moody's forecast that the company's
Moody's-adjusted EBITDA will remain broadly flat over 2024-25.
Despite the lower earnings growth, its Moody's-adjusted gross
leverage will decline towards zero by the end of 2025, thanks to
the debt repayment.
Thanks to the stable earnings, FAGE will continue to generate
positive free cash flow (FCF) in 2024. However, Moody's expect FCF
to decrease after 2025 but to remain positive, due to resumed
investment in a new manufacturing plant. This facility's
investment, delayed several times, is expected to exceed $200
million in additional capital expenditures, mostly between 2026 and
2028.
LIQUIDITY
FAGE has good liquidity. As of June 2024, the company had $18
million in cash and cash equivalents, pro forma for the $60 million
debt repayment. In addition, FAGE has a $35 million fully available
committed Asset-Based Lending (ABL) facility maturing in 2026. FAGE
has no debt maturities until 2026, when the outstanding $44 million
backed senior unsecured notes matures. The ABL facility includes a
springing covenant tested if the facility is drawn by at least 85%
based on a fixed charge coverage ratio of at least 1.1x. Moody's
expect the company to have adequate capacity under this covenant.
Moody's forecast that the company will generate positive FCF of
around $60 million per year in in 2024 and 2025.
STRUCTURAL CONSIDERATIONS
FAGE's debt mainly includes the remaining $44 million of backed
senior unsecured notes due 2026, jointly issued by FAGE and FAGE
USA, a subsidiary of FAGE, and guaranteed by FAGE Greece Dairy
Industry Single Member S.A. The notes are rated Ba3, in line with
the company's CFR, given the absence of significant secured debt in
FAGE's capital structure. The notes rank pari passu with other
unsecured debt and are structurally subordinated to the liabilities
of non-guaranteeing subsidiaries. However, there are no significant
liabilities at non-guarantors, offering substantial protection from
subordination to noteholders. In 2023, issuers and guarantors
represented around 90% of FAGE's sales and more than 97% of its
total assets.
RATIONALE FOR THE POSITIVE OUTLOOK
The positive rating outlook reflects Moody's expectation that FAGE
will maintain low leverage thanks to the stable operating
performance and the debt repayment, which will leave the company
strongly positioned in the rating category.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Further positive rating pressure would develop if FAGE: (1)
maintains strong operating performance through the milk price
cycle; (2) maintains a strong balance sheet with very low leverage
and a sustained solid liquidity profile; (3) successfully executes
its manufacturing expansion plan, improving its scale and
diversification. Negative rating pressure could develop in case of:
(1) sustained deterioration in FAGE's operating performance; (2)
its Moody's-adjusted gross debt/EBITDA deteriorates towards 3.0x;
(3) its underlying free cash flow (FCF) turns negative on a
sustained basis; (4) its liquidity weakens materially.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
COMPANY PROFILE
FAGE is an international, family-owned business, whose main
activities are the manufacturing and marketing of Greek yoghurt.
The company's sales are concentrated in the US and Europe (mainly
Greece, UK and Italy). In 2022 FAGE reported revenues and EBITDA of
$552 million and $85 million, respectively. For the twelve months
that ended in June 2024, FAGE generated revenue and EBITDA
(Moody's-adjusted) of $678 million and $174 million, respectively.
=============
I R E L A N D
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AVOCA CLO XI: Moody's Ups Rating on EUR15.8MM Cl. F-R Notes to Ba2
------------------------------------------------------------------
Moody's Ratings has upgraded the ratings on the following notes
issued by Avoca CLO XI Designated Activity Company:
EUR23,000,000 Class D-R Deferrable Mezzanine Floating Rate Notes
due 2030, Upgraded to Aaa (sf); previously on Feb 12, 2024 Upgraded
to Aa3 (sf)
EUR27,500,000 Class E-R Deferrable Junior Floating Rate Notes due
2030, Upgraded to A3 (sf); previously on Feb 12, 2024 Upgraded to
Baa3 (sf)
EUR15,800,000 Class F-R Deferrable Junior Floating Rate Notes due
2030, Upgraded to Ba2 (sf); previously on Feb 12, 2024 Upgraded to
Ba3 (sf)
Moody's have also affirmed the ratings on the following notes:
EUR300,000,000 (Current outstanding amount EUR32,280,227) Class
A-R-R Senior Secured Floating Rate Notes due 2030, Affirmed Aaa
(sf); previously on Feb 12, 2024 Affirmed Aaa (sf)
EUR20,000,000 Class B-1R-R Senior Secured Fixed Rate Notes due
2030, Affirmed Aaa (sf); previously on Feb 12, 2024 Affirmed Aaa
(sf)
EUR27,000,000 Class B-2R Senior Secured Floating Rate Notes due
2030, Affirmed Aaa (sf); previously on Feb 12, 2024 Affirmed Aaa
(sf)
EUR13,000,000 Class B-3R Senior Secured Floating Rate Notes due
2030, Affirmed Aaa (sf); previously on Feb 12, 2024 Affirmed Aaa
(sf)
EUR21,000,000 Class C-1R Deferrable Mezzanine Floating Rate Notes
due 2030, Affirmed Aaa (sf); previously on Feb 12, 2024 Upgraded to
Aaa (sf)
EUR15,000,000 Class C-2R Deferrable Mezzanine Floating Rate Notes
due 2030, Affirmed Aaa (sf); previously on Feb 12, 2024 Upgraded to
Aaa (sf)
Avoca CLO XI Designated Activity Company, originally issued in June
2014 and refinanced in May 2017 and November 2019, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly senior secured European loans and bonds. The portfolio is
managed by KKR Credit Advisors (Ireland) Unlimited Company. The
transaction's reinvestment period ended in June 2021.
RATINGS RATIONALE
The rating upgrades on the Class D-R, E-R and F-R notes are
primarily a result of the significant deleveraging of the Class
A-R-R notes following amortisation of the underlying portfolio and
the improvement in over-collateralisation ratios since the last
rating action in February 2024.
The affirmations on the ratings on the Class A-R-R, B-1R-R, B-2R,
B-3R C-1R and C-2R notes are primarily a result of the expected
losses on the notes remaining consistent with their current rating
levels, after taking into account the CLO's latest portfolio, its
relevant structural features and its actual over-collateralisation
ratios.
The Class A-R-R notes have paid down by approximately EUR68.8
million (22.9% of the initial balance) since the last rating action
in February 2024, or 89.2% since closing. As a result of the
deleveraging, over-collateralisation (OC) has increased across the
capital structure. According to the trustee report dated August
2024 [1] the Class A/B, Class C, Class D, Class E and Class F OC
ratios are reported at 247.60%, 178.11%, 151.03%, 127.80% and
117.42% compared to January 2024 [2] levels of 186.00%, 152.00%,
136.10%, 121.00% and 113.70%, respectively.
The deleveraging and OC improvements primarily resulted from high
prepayment rates of leveraged loans in the underlying portfolio.
Most of the prepaid proceeds have been applied to amortise the
liabilities. All else held equal, such deleveraging is generally a
positive credit driver for the CLO's rated liabilities.
The key model inputs Moody's use in Moody's analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers.
In its base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR230.04 million
Defaulted Securities: EUR0.9 million
Diversity Score: 38
Weighted Average Rating Factor (WARF): 3068
Weighted Average Life (WAL): 3.22 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.51%
Weighted Average Coupon (WAC): 4.32%
Weighted Average Recovery Rate (WARR): 44.4%
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporate these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2024.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank, using the
methodology "Moody's Approach to Assessing Counterparty Risks in
Structured Finance methodology" published in October 2023. Moody's
concluded the ratings of the notes are not constrained by these
risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
-- Portfolio amortisation: The main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
-- Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assume have
defaulted can result in volatility in the deal's
over-collateralisation levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's analysed
defaulted recoveries assuming the lower of the market price or the
recovery rate to account for potential volatility in market prices.
Recoveries higher than Moody's expectations would have a positive
impact on the notes' ratings.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
other Moody's analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
MAN GLG III: S&P Affirms 'B-(sf)' Rating on Class F Notes
---------------------------------------------------------
S&P Global Ratings raised to 'AAA (sf)' from 'AA- (sf)', and to 'A+
(sf)' from 'BBB+ (sf)' its credit ratings on Man GLG Euro CLO III
DAC's class C and D notes, respectively. At the same time, S&P
affirmed its 'AAA (sf)' ratings on the class A-R, B-1, and B-2-R
notes, 'BB (sf)' rating on the class E notes, and 'B- (sf)'rating
on the class F notes.
S&P's rating actions follow the application of its relevant
criteria and its credit and cash flow analysis of the transaction
based on the August 2024 trustee monthly report in conjunction with
the July 2024 trustee payment report.
Since S&P's last review:
-- The pool's overall credit quality has slightly deteriorated (as
captured by the S&P Global Ratings' weighted-average rating
factor).
-- Portfolio concentration is higher (the number of performing
obligors has decreased to 101 from 158 since S&P's last review) due
to the amortization of the collateral pool.
-- The portfolio's weighted-average life has decreased to 3.23
years from 3.46 years.
-- The percentage of 'CCC' rated assets has increased to 9.48%
from 9.29% of the S&P Global Ratings' aggregate collateral balance
(ACB).
-- The percentage of nonperforming assets has decreased to 0.44%
from 3.06% of our ACB.
Despite the portfolio's lower weighted-average life, the scenario
default rates have increased for most rating scenarios, reflecting
the portfolio's increased concentration and deteriorating credit
quality.
Table 1
Transaction key metrics
AS OF THE AS OF THE
AUGUST 2024 AUGUST 2023
TRUSTEE REPORT REVIEW
SPWARF 2,982.88 2,941.48
Default rate dispersion 708.70 746.67
Weighted-average life (years) 3.24 3.46
Obligor diversity measure 68.19 114.89
Industry diversity measure 15.78 21.95
Regional diversity measure 1.20 1.24
Total collateral amount
(mil. EUR)* 156.47 265.80
Defaulted assets (mil. EUR) 0.69 8.14
'CCC' assets (mil. EUR) 14.84 24.69
Number of performing obligors 101 158
Portfolio weighted-average
Rating B B
'AAA' SDR (%) 59.98 58.39
'AAA' WARR (%) 36.55 37.15
*Performing assets plus cash and expected recoveries on defaulted
assets.
SPWARF--S&P Global Ratings' weighted-average rating factor.
SDR--scenario default rate.
WARR--Weighted-average recovery rate.
On the cash flow side:
-- The reinvestment period ended in October 2021. The class A-R
notes have since deleveraged by EUR176.98 million, leaving a note
factor of 16.52% outstanding. This has increased the available
credit enhancement for all classes of notes.
-- No class of notes defers interest.
-- All coverage tests are passing as of the August 2024 trustee
report, apart from the class F par value test, which is failing by
56 basis points.
Table 2
Credit analysis results
CURRENT CREDIT ENHANCEMENT CREDIT ENHANCEMENT
AMOUNT AS OF THE AUGUST 2024 AS OF THE AUGUST 2023
CLASS (MIL. EUR) TRUSTEE REPORT (%) REVIEW (%)
A-R 35.02 77.62 46.52
B-1 23.30 56.34 33.99
B-2-R 10.00 56.34 33.99
C 32.00 35.89 21.95
D 18.00 24.38 15.18
E 19.80 11.73 7.73
F 10.40 5.08 3.81
Sub 38.20 N/A N/A
Credit enhancement = [Performing balance + cash balance + recovery
on defaulted obligations (if any) – tranche balance (including
tranche balance of all senior tranches)] / [Performing balance +
cash balance + recovery on defaulted obligations (if any)].
N/A--Not applicable.
S&P said, "Considering the portfolio's higher concentration, the
underlying portfolio's deteriorating credit quality, and the lower
weighted-average recovery rates, we raised our ratings on the class
C and D notes. Their available credit enhancement is now
commensurate with higher stress levels.
"Following our analysis, we consider that the available credit
enhancement for the class A-R, B-1, and B-2-R notes remains
commensurate with a 'AAA' rating. We therefore affirmed our ratings
on the notes.
"Our cash flow analysis indicated higher ratings than those
currently assigned for the class D and E notes. However, we
considered that the manager has and may continue to reinvest
unscheduled redemption proceeds and sale proceeds from
credit-impaired and credit-improved assets (such reinvestments,
rather than repayment of the liabilities, may prolong the note
repayment profile for the most senior class of notes). We also
considered current macroeconomic conditions. We therefore limited
our upgrade of the class D notes, and affirmed our rating on the
class E notes.
"Our affirmation of our 'B- (sf)' rating on the class F notes
reflects the available credit enhancement for this class, the
portfolio's average credit quality, and compares our model
generated break-even default rate at the 'B-' rating level versus
the long-term sustainable default rate. Under our 'CCC' rating
criteria, we also assessed (i) whether the tranche is vulnerable to
non-payments soon, (ii) if there is a one in two chance of this
tranche defaulting, and (iii) if we envision this tranche
defaulting in the next 12-18 months. Following this analysis, we
consider the available credit enhancement for the class F notes
commensurate with a 'B- (sf)' rating."
The ratings assigned to the class A-R, B-1, and B-2-R notes address
timely interest and ultimate principal payments. The ratings
assigned to the class C, D, E, and F notes address ultimate
interest and principal payments.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria.
"Counterparty, operational, and legal risks are adequately
mitigated in line with our criteria."
Man GLG Euro CLO III DAC is a cash flow CLO transaction
securitizing leveraged loans and managed by GLG Partners LP.
RRE 21 LOAN: S&P Assigns BB-(sf) Rating on Class D Notes
--------------------------------------------------------
S&P Global Ratings assigned its credit ratings to RRE 21 Loan
Management DAC's class A-1 to D notes. At closing, the issuer also
issued unrated performance, preferred return, and subordinated
notes.
This is a European cash flow CLO transaction, securitizing a
portfolio of primarily senior secured leveraged loans and bonds.
The transaction is managed by Redding Ridge Asset Management (UK)
LLP.
The ratings assigned to the 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 transaction's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
our counterparty rating framework.
-- Under the transaction documents, the rated notes 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 4.6
years after closing, and the portfolio's maximum average maturity
date is approximately 9.0 years after closing.
Portfolio benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,850.76
Default rate dispersion 399.69
Weighted-average life (years) 4.67
Obligor diversity measure 107.06
Industry diversity measure 19.16
Regional diversity measure 1.23
Transaction key metrics
CURRENT
Total par amount (mil. EUR) 400
Defaulted assets (mil. EUR) 0
Number of performing obligors 132
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.92
Target 'AAA' weighted-average recovery (%) 37.08
Target portfolio weighted-average spread;
net of floors (%) 4.08
S&P said, "Our ratings reflect our assessment of the collateral
portfolio's credit quality, which has a weighted-average rating of
'B'.
"The portfolio is well-diversified, primarily comprising broadly
syndicated speculative-grade senior secured term loans and senior
secured bonds. Therefore, we have conducted our credit and cash
flow analysis by applying our criteria for corporate cash flow
CDOs. As such, we have not applied any additional scenario and
sensitivity analysis when assigning ratings to any class of notes
in this transaction.
"In our cash flow analysis, we used the EUR400 million target par
amount, the covenanted weighted-average spread (3.70%), and the
covenanted weighted-average coupon indicated by the collateral
manager (5.50%) and the covenanted portfolio weighted-average
recovery rates for all the rated notes. We applied various cash
flow stress scenarios, using four different default patterns, in
conjunction with different interest rate stress scenarios for each
liability rating category.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class A-2A to D notes could withstand
stresses commensurate with higher ratings than those assigned.
However, as the CLO will be in its reinvestment phase starting from
closing, during which the transaction's credit risk profile could
deteriorate, we have capped the assigned ratings. The class A-1
notes can withstand stresses commensurate with the assigned
rating.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our counterparty criteria.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria.
"The transaction's legal structure is bankruptcy remote, in line
with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe that our assigned ratings
are commensurate with the available credit enhancement for the
class A-1, A-2A, A-2B, B, C-1, C-2, and D notes.
"In addition to our standard analysis, we have also included the
sensitivity of the ratings on the class A-1 to D notes to four
hypothetical scenarios."
Environmental, social, and governance factors
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit assets from being related
to certain industries, including, but not limited:
Thermal-coal-based power generation, mining or extraction; arctic
oil or gas production, and unconventional oil or gas production
from shale, tight reservoirs, or oil sands; production of civilian
weapons; development of nuclear weapon programs and production of
controversial weapons; management of private for-profit prisons;
tobacco or tobacco products; opioids; adult entertainment;
speculative transactions of soft commodities; predatory lending
practices; non-sustainable palm oil productions; animal testing for
non-pharmaceutical products; endangered species; and banned
pesticides or chemicals.
"Accordingly, since the exclusion of assets from these industries
does not result in material differences between the transaction and
our ESG benchmark for the sector, no specific adjustments have been
made in our rating analysis to account for any ESG-related risks or
opportunities."
Ratings
AMOUNT CREDIT
CLASS RATING* (MIL. EUR) ENHANCEMENT (%) INTEREST RATE§
A-1 AAA (sf) 248.00 38.00 Three/six-month EURIBOR
plus 1.30%
A-2A AA (sf) 32.50 28.00 Three/six-month EURIBOR
plus 1.95%
A-2B AA (sf) 7.50 28.00 5.05%
B A (sf) 28.00 21.00 Three/six-month EURIBOR
plus 2.20%
C-1 BBB (sf) 24.00 15.00 Three/six-month EURIBOR
plus 3.20%
C-2 BBB- (sf) 4.00 14.00 Three/six-month EURIBOR
plus 4.60%
D BB- (sf) 15.20 10.20 Three/six-month EURIBOR
plus 6.15%
Performance
Notes NR 1.00 N/A N/A
Preferred
return notes NR 0.25 N/A N/A
Subordinated
Notes NR 47.00 N/A N/A
*The ratings assigned to the class A-1, A-2A, and A-2B notes
address timely interest and ultimate principal payments. The
ratings assigned to the class B, C-1, C-2, and D notes address
ultimate interest and principal payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
NR--Not rated.
N/A--Not applicable.
EURIBOR--Euro Interbank Offered Rate.
SHAMROCK RESIDENTIAL 2022-2: S&P Cuts F-Dfrd Notes Rating to 'B-'
-----------------------------------------------------------------
S&P Global Ratings lowered its credit ratings on Shamrock
Residential 2022-2 DAC's class F-Dfrd notes to 'B- (sf)' from 'B
(sf)' and class G-Dfrd notes to 'CCC (sf)' from 'B- (sf)'. At the
same time, S&P raised its ratings on the class B-Dfrd notes to 'AA
(sf)' from 'AA- (sf)'. S&P also affirmed its 'AAA (sf)', 'A (sf)',
'BBB (sf)', and 'BB (sf)' ratings on the class A, C-Dfrd, D-Dfrd,
and E-Dfrd notes, respectively.
The rating actions reflect its full analysis of the most recent
transaction information and the transaction's structural features.
Almost 70% of the loans in the transaction at closing had been
previously restructured, and 22.7% were at least one month in
arrears. Since closing in October 2022, reported arrears have
increased to 39.3%, of which 31.3% (17.6% at closing) were 90+ days
past due as of May 2024. This reflects the high proportion of loans
in the portfolio that are on a variable rate, which have been
directly affected by recent interest rate rises. Arrears stood at
30.8% in April 2023.
Additionally, as of the July 2024 interest payment date, the
general reserve fund has been drawn to EUR927,000 from the target
of EUR4.60 million. Draws on the general reserve fund commenced in
November 2022. The liquidity reserve fund remains at its target.
Despite the negative trends in arrears, there has been notable
paydown of the notes since closing, which has increased available
credit enhancement. S&P has also seen strong house price increases
in Ireland during this period.
This transaction contains a contractual floor of one-month Euro
interbank Offered Rate plus 2.5% in the transaction documents for
loans that are on a standard variable rate. In the most recent
period, we calculated a margin of 2.8% on these loans, which is in
line with this floor.
S&P said, "After applying our global RMBS criteria, our credit
coverage has increased across all rating categories since our
previous review, albeit very slightly at higher rating categories.
For the lower rating categories, the higher arrears--specifically
the gain in 90+ days arrears--has raised the weighted-average
foreclosure frequency (WAFF) materially."
The loan portfolio benefits from a lower reperforming loan
adjustment given the portfolio's increased seasoning since the last
review and since closing.
Credit analysis results
RATING LEVEL WAFF (%) WALS (%) CC (%)
AAA 60.57 34.75 21.05
AA 53.02 30.90 16.38
A 48.64 24.45 11.89
BBB 43.40 21.03 9.13
BB 37.22 18.74 6.98
B 35.89 16.72 6.00
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
CC--Credit coverage.
S&P said, "We consider the transaction's resilience in case of
additional stresses to some key variables, in particular defaults
and loss severity, to determine our forward-looking view. In our
view, the ability of the borrowers to repay their mortgage loans
will be highly correlated to macroeconomic conditions, particularly
the unemployment rate, consumer price inflation, and interest
rates.
"Policy interest rates in the eurozone may have peaked--the
European Central Bank began cutting rates in summer 2024. Our
unemployment rate estimates for Ireland in 2023 and forecasts for
2024 and 2025 are 4.3% and 4.1% and 4.0%, respectively. Most of the
borrowers in this transaction pay variable interest rates, leading
to near-term pressure from both a cost of living and rate rise
perspective. We have considered this in both our credit and cash
flow analyses.
"In our view, eurozone inflation peaked in 2022 at 8.4%. Continued
high inflation estimates in 2023 and forecasts for 2024 are
subsiding at 5.4% and 2.4%, respectively. We forecast that
inflation will return to normalized levels in 2025 to 2.3%. If
inflationary pressures materialize more quickly or more severely
than currently expected, risks may emerge. We consider the
borrowers in this transaction to be reperforming and as such they
will generally have lower resilience to inflationary pressures than
prime borrowers.
"Furthermore, a decline in house prices typically decreases the
level of realized recoveries. For Ireland in 2024, we expect house
prices to increase by 5.8%, a slower pace than that seen in recent
years, yet still higher than forecasted inflation. We ran
additional scenarios to test the effect of a decline in house
prices. The results of the sensitivity analysis indicate a
deterioration of no more than one category on the notes, which is
in line with the credit stability considerations in our rating
definitions.
"A general housing market downturn may delay recoveries. We have
also run extended recovery timings to understand the transaction's
sensitivity to liquidity risk.
"We lowered our ratings on the class F-Dfrd and G-Dfrd notes,
reflecting the deterioration in their cash flow results due to the
elevated arrears. For these junior notes, the increased credit
enhancement and decreased WALS levels do not mitigate the effect of
the increased WAFF at the lower rating levels. Our analysis also
reflected the transaction's conditional prepayment rates. We
considered the notes' potential sensitivity to further rises in
arrears, particularly given the steep trajectory of arrears
increases and pay rate performance in recent months.
"Given the class F-Dfrd and G-Dfrd notes' sensitivity to the
stresses we apply at our 'B' rating level, we applied our 'CCC'
criteria. We performed a qualitative assessment of the key
variables, along with simulating a steady state scenario (actual
conditional prepayment rates, actual fees, and no commingling
stress) in our cash flow analysis.
"The class F-Dfrd notes can pass such a scenario. We therefore do
not consider their repayment to be dependent upon favorable
business, financial, and economic conditions, and we lowered our
rating to 'B- (sf)' from 'B (sf)'.
"The class G-Dfrd notes cannot pass such a scenario. We therefore
consider their repayment to be dependent upon favorable business,
financial, and economic conditions, and lowered our rating to 'CCC
(sf)' from 'B- (sf)'.
"We raised our ratings on the class B-Dfrd notes, reflecting the
notes' increased credit enhancement at senior rating levels. We
limited our upgrades after considering the tranche's potential
sensitivity to increased recovery timings and further rises in
arrears, given the performance of peer transactions in recent
months.
"We affirmed our ratings on the class C-Dfrd, D-Dfrd, and E-Dfrd
notes, considering the results of our cash flow analysis. These
notes pass at levels higher than the assigned ratings in our
standard run, with the increased credit enhancement offsetting the
rise in arrears. However, under some of our sensitivity runs these
notes deteriorate to their current rating levels. Given the notes'
position in the waterfall, we will continue to monitor their
performance under a potential increase in arrears.
"We also affirmed our rating on the class A notes, given they pass
at their current rating level in all sensitivities."
Shamrock Residential 2022-2 is a static RMBS transaction that
securitizes a portfolio of reperforming owner-occupied and
buy-to-let mortgage loans, secured over residential properties in
Ireland. The transaction closed in October 2022.
=========
I T A L Y
=========
BRIGNOLE CQ 2024: Fitch Assigns 'BB+sf' Final Rating on Cl. X Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Brignole CQ 2024 S.r.l. 's asset-backed
securities final ratings.
Entity/Debt Rating Prior
----------- ------ -----
Brignole CQ 2024 S.r.l.
Class A IT0005612319 LT AAsf New Rating AA(EXP)sf
Class B IT0005612327 LT Asf New Rating A(EXP)sf
Class C IT0005612335 LT BBBsf New Rating BBB(EXP)sf
Class D IT0005612343 LT BBB-sf New Rating BBB-(EXP)sf
Class X IT0005612350 LT BB+sf New Rating BB+(EXP)sf
Transaction Summary
Brignole CQ 2024 is a static securitisation of fully amortising
salary assignment loans (SAL) granted to pensioners, public- and
private-sector employees by Creditis Servizi Finanziari S.p.A.,
which is owned by Chenavari Credit Partners LLP through Columbus
HoldCo. The transaction follows the unwinding of the predecessor
Brignole CQ 2022 S.r.l., the portfolio of which forms around 50% of
Brignole CQ 2024's portfolio.
KEY RATING DRIVERS
Significant Public-Sector Exposure: The public sector exposure at
closing is over 33% of the portfolio outstanding balance. The
portfolio comprises salary and pension assignment loans and
delegation of payments (collectively SAL) granted to pensioners
(65.6%), public-sector employees (22.5%) and private-sector
employees (11.8%). Fitch has set a weighted average (WA) lifetime
base-case default rate of 8.2%. Life defaults are mainly related to
pensioners, whereas non-life defaults drive defaults for public-
and private-sector borrowers.
Sovereign Adjustment Factor Applies: Fitch applied a sovereign
adjustment factor (SAF) of 1.30x to non-life default multiples at
'AAsf' for public-sector borrowers and pensioners to consider SAL's
heightened dependence on, and interconnectedness with, the Italian
sovereign. Fitch has derived a non-life WA stress multiple,
including the SAF, of 5.5x at 'AAsf' to the lifetime base-case
default rate. Life defaults are not stressed across the rating
scale.
Mandatory Insurance Increases Recoveries: The underlying loans
benefit from mandatory insurance (life or unemployment, as
applicable). Fitch has assigned a WA base-case recovery rate of
89.8%, which includes expected recoveries derived from insurance
policies as well as unsecured recoveries related to non-insured
default events. The 'AAsf' 29.7% recovery rate is determined by
applying a 55% haircut to unsecured uninsured recoveries and
haircuts that are commensurate with insurers' ratings for insured
recoveries, in accordance with Fitch's criteria.
Sequential Switch Mitigates Pro-Rata Repayment: The class A to D
notes can repay pro-rata until a sequential redemption event occurs
if, among other events, the cumulative gross default ratio exceeds
certain thresholds. The mandatory switch to sequential paydown when
the outstanding collateral balance falls below 10% mitigates tail
risk. In its expected case, Fitch believes the switch to sequential
amortisation is unlikely until the 10% collateral balance trigger
is breached, given the gap between its expectations for the
portfolio's performance and defined triggers.
Payment Interruption Risk Mitigated: Payment interruption risk is
mitigated for the senior notes as at least six months of the class
A to D interest payments and senior expenses are protected. In its
assessment, Fitch considered the transaction's reserve fund and a
buffer of more than five years between the legal final maturity of
the notes and the last maturing loan in the portfolio. Fitch has
assumed that payments from private-sector borrowers will continue
to be made in a scenario of salary and pension delays owing to
sovereign distress.
Excess Spread Dependence: The class X notes are not collateralised
and the related interest and principal will be paid from available
excess spread. The class X notes will start amortising from the
issue date according to a schedule. Excess spread notes are
typically sensitive to underlying loan performance and prepayments
and cannot achieve a rating higher than 'BB+sf'.
'AAsf' Sovereign Cap: Italian structured finance transactions are
capped at six notches above the rating of Italy (BBB/Stable/F2),
which is the case for the class A notes. No additional rating cap
applies because the portfolio's top 10 employers, excluding pension
providers, represents less than 20% of the portfolio balance.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The class A notes' rating is sensitive to changes in Italy's
Long-Term Issuer Default Rating (IDR). A downgrade of Italy's IDR
and downward revision of the 'AAsf' rating cap for Italian
structured finance transactions would trigger a downgrade of the
notes.
Fitch found that a simultaneous increase in the default base case
by 25%, and a decrease in the recovery base case by 25%, would lead
to downgrades of up to four notches for all the notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of Italy's IDR and upward revision of the 'AAsf' rating
cap for Italian structured finance transactions could trigger an
upgrade of the notes, provided sufficient credit enhancement is
available to withstand stresses at a higher rating.
A simultaneous decrease in the default base case by 25% and an
increase in the recovery base case by 25% would lead to upgrades of
up to four notches for all notes except for the class A notes.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch reviewed the results of a third party assessment conducted on
the asset portfolio information, and concluded that there were no
findings that affected the rating analysis.
Fitch conducted a review of a small targeted sample of the
originator's origination files and found the information contained
in the reviewed files to be adequately consistent with the
originator's policies and practices and the other information
provided to the agency about the asset portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
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.
GOLDEN BAR 2024-1: Fitch Assigns BB+sf Final Rating on Cl. D Notes
------------------------------------------------------------------
Fitch Ratings has assigned Golden Bar (Securitisation) S.r.l. -
Series 2024-1's (GB) asset-backed securities final ratings.
The class B notes' final rating is one notch higher than the
expected rating, due to a revised margin on the class A to D notes
after pricing.
Entity/Debt Rating Prior
----------- ------ -----
Golden Bar (Securitisation)
S.r.l. - Series 2024-1
Class A IT0005611378 LT AAsf New Rating AA(EXP)sf
Class B IT0005611386 LT AA-sf New Rating A+(EXP)sf
Class C IT0005611394 LT BBBsf New Rating BBB(EXP)sf
Class D IT0005611402 LT BB+sf New Rating BB+(EXP)sf
Class Z IT0005611576 LT NRsf New Rating NR(EXP)sf
Transaction Summary
GB is a revolving securitisation of personal and vehicles loans
featuring a standard amortisation (French) or balloon repayment
granted to individuals ("persone fisiche") and individual
entrepreneurs, by Santander Consumer Bank S.p.A. (SCB). SCB is
wholly owned by Santander Consumer Finance, S.A. (SCF;
A-/Stable/F2), the consumer credit arm of Banco Santander, S.A.
(A-/Stable/F2).
KEY RATING DRIVERS
Diverse Portfolio Composition: The portfolio is made up of personal
loans at around 48% by current balance and vehicles loans granted
to consumer borrowers, with a minimal exposure to individual
entrepreneurs. Fitch's base-case default expectations are set at
6.5%, 1.5%, 3.0% and 1.3%, respectively, for personal loans,
standard new vehicles, standard used vehicles and balloon loans.
Pro-rata Amortisation: The class A to C notes repay pro-rata until
a sequential redemption event occurs. In its base case Fitch sees a
switch to sequential amortisation as unlikely due to the gap
between its portfolio loss expectations and performance triggers.
The mandatory switch to sequential paydown when the outstanding
collateral balance falls below a certain threshold mitigates tail
risk.
Servicer Reserve Reduces Senior Costs: The transaction envisages an
amortising replacement servicer fee reserve (RSFR) that will be
funded on certain triggers being breached. Fitch believes the
reserve is adequate to cover its stressed servicer fees at the
notes' maximum achievable rating throughout the transaction's life.
Therefore, no servicing fees are modelled in Fitch's cash flow
analysis, resulting in higher excess spread being available to the
structure.
Excess Spread Notes Rating Cap: The class D notes - excess spread
notes - are not collateralised and their interest and principal are
paid from available excess spread. The class D notes start
amortising from the issue date and during a three-month revolving
period. Excess spread is highly volatile and sensitive to
underlying loan performance, leading Fitch to cap the rating on the
class D notes at 'BB+sf', in line with its Global Structured
Finance Rating Criteria.
'AAsf' Sovereign Cap: The class A notes are rated at their highest
achievable rating, six notches above Italy's sovereign rating
(BBB/Stable/F2), which is the cap for Italian structured finance
and covered bonds. The Stable Outlook on the rated notes reflects
that of the sovereign.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The class A notes' ratings are sensitive to changes to Italy's
Long-Term IDR. A downgrade of Italy's IDR and the related rating
cap for Italian structured finance transactions, currently 'AAsf',
could trigger a downgrade of the class A notes' ratings.
Unexpected increases in the frequency of defaults or decreases in
recovery rates that could produce larger losses than the base case
could result in negative rating action on the notes. For example, a
simultaneous increase of the default base case by 25% and decrease
of the recovery base case by 25% would lead to downgrades of the
class A to C notes of up to two notches.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of Italy's IDR and the related rating cap for Italian
structured finance transactions, currently 'AAsf', could trigger an
upgrade of the class A notes' ratings if available credit
enhancement is sufficient to withstand stresses associated with
higher ratings.
An unexpected decrease in the frequency of defaults or increase in
recovery rates that would produce smaller losses than the base case
could result in a positive rating action. For example, a
simultaneous decrease in the default base case by 25% and an
increase in the recovery base case by 25% would lead to upgrades of
the class B to C notes of up to three notches.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Golden Bar (Securitisation) S.r.l. - Series 2024-1
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action
Fitch reviewed the results of a third party assessment conducted on
the asset portfolio information, and concluded that there were no
findings that affected the rating analysis.
Fitch conducted a review of a small targeted sample of the
originator's origination files and found the information contained
in the reviewed files to be adequately consistent with the
originator's policies and practices and the other information
provided to the agency about the asset portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
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.
===================
L U X E M B O U R G
===================
ACCORINVEST GROUP: Fitch Rates EUR750MM Secured Notes 'BB'
----------------------------------------------------------
Fitch Ratings has assigned AccorInvest Group S.A.'s a final senior
secured rating of 'BB' with a Recovery Rating of 'RR1'. The
assignment of a final rating follows the issuance of EUR750 million
6.375% notes, with documentation conforming to information
previously received.
The higher amount of senior secured notes is leverage neutral and
has no impact on the rating as the company plans to use proceeds to
repay EUR457 million outstanding under its bridge facility maturing
in March 2025 and partially and equally prepay its term loans A and
B.
The 'B' IDR reflects reduced refinancing risks following recent
extension of term loans and revolving credit facility (RCF) and
successful placement of the bond, which will address the bridge
loan maturity.
The rating is also supported by projected strengthening of credit
metrics over the next two years, which will increase rating
headroom and reduce refinancing risks related to the next large
debt maturity in 2027. The rating considers the strength of
AccorInvest's business profile in comparison with other 'B'
category peers and neutral to positive free cash flow (FCF)
generation.
The Stable Outlook reflects its expectation that further asset
divestments will improve AccorInvest's liquidity, and in case of
slower progress with disposals, the company will be eligible to
receive additional EUR100 million from shareholders.
Key Rating Drivers
Addressed 2025 Maturities: AccorInvest has made significant
progress addressing its 2025 debt maturities. It has executed
amendment and extension of term loans A and B and the RCF, and
repaid around EUR700 million under the bridge facility since the
beginning of 2024.
It is using proceeds from the notes to repay the remaining EUR457
million outstanding under the bridge facility and partially and
equally prepay term loans A and B. This will leave EUR191 million
amortisation payment under government-backed facilities (PGE) as
the only 2025 debt maturity. AccorInvest will also have a more
favourable debt maturity profile, with some concentration in 2027,
but Fitch acknowledges the company's ability to extend the RCF and
term loan B to December 2028.
Asset Disposals Part of Strategy: AccorInvest has been
rationalising its hotel portfolio since 2021 through non-core asset
divestments, which included assets outside its core region or not
meeting profitability and return criteria. Progress under the
programme has accelerated in 2024, with EUR386 million of proceeds
received in 7M24 after slowing down in 2023 due to the unfavourable
market environment. Nevertheless, Fitch still sees execution risks
for the remaining divestments planned for 2024-2025, for which the
company aims to receive more than EUR800 million. Successful
realisation of the disposal plan would reduce strategy execution
risks and leverage.
Deleveraging Executed: AccorInvest has managed to reduce debt by
around EUR900 million since end-2023, using available cash and
proceeds from asset disposals and preference shares issuance (as a
form of shareholder support, which Fitch treated as non-debt).
Fitch expects AccorInvest's EBITDAR net leverage to fall to 6.1x in
2024 (2023: 6.7x), which is aligned with its 'B' rating. Fitch
believes this deleveraging will be sustained, even if EBITDA
reduces due to asset divestments, as Fitch expects proceeds to be
available for debt repayment and therefore account for them in its
net leverage calculation.
Trading Normalisation: AccorInvest benefited from the post-pandemic
rebound in travel and leisure demand and significant pricing power,
which drove revenue and EBITDA growth in 2022-2023. Fitch projects
revenue per available room growth to moderate to low single digits
as demand stabilises in 2024. Fitch also assumes that further
EBITDA margin improvements, excluding the impact of asset
divestments and swaps, will be more limited and related mostly to
cost savings.
Structural Profitability Improvements: Fitch expects the EBITDA
margin to increase by around 200bp over 2024-2027, supported by the
disposal plan as it focuses on assets with lower profitability. In
addition, Fitch assumes that AccorInvest's asset swap transaction
with Covivio hotels will allow it to reduce rents and improve
EBITDA margin.
Neutral to Positive FCF: Neutral to positive FCF is important for
AccorInvest's liquidity and 'B' rating. Fitch believes this is
achievable if asset disposals do not significantly erode EBITDA
(2023: EUR628 million). Interest payments and capex are
substantial, totalling around EUR500 million-EUR550 million a year
but Fitch acknowledges AccorInvest's flexibility to reduce capex
and save at least EUR100 million a year if necessary.
Strong Business Profile: AccorInvest's business profile is strong
for the rating. The company owns and operates one of the largest
hotel portfolios in Europe with around 110,000 rooms at end-June
2024 and is well-diversified within the region with no significant
reliance on one single country.
It also has some price segment diversification, as it is present in
the economy and midscale segments. AccorInvest owns 47% of its
hotel portfolio (by number of hotels), which gives it additional
financial flexibility compared with peers that lease their
properties. However, its assessment considers the lack of own
brands, as the company operates under the brands of Accor SA
(BBB-/Positive), which is also responsible for providing hotel
management expertise and the reservation system.
Derivation Summary
AccorInvest differs from other Fitch-rated hotel operators as it
does not own brands. It compares best with other asset-heavy hotel
operators, with Whitbread PLC (BBB/Stable) its closest peer. Both
companies operate a similar number of rooms and have comparable
business scale by EBITDAR. AccorInvest is more diversified than
Whitbread due to its footprint across 24 countries, while Whitbread
operates predominantly in the UK and is expanding into Germany.
AccorInvest also has better price segment diversification across
economy and midscale while Whitbread focuses on the economy
segment. Nevertheless, the significant rating differential comes
from AccorInvest's materially weaker financial profile and more
volatile operating performance. Fitch also considers there are
greater execution risks in AccorInvest's strategy, which involves
asset disposals.
AccorInvest's business profile is stronger than those of other
asset-heavy hotel operators (those who own and lease hotels), such
as Sani/Ikos Group Newco S.C.A. (B-/ Stable), FIVE Holdings (BVI)
Limited (B+/ Stable) and One Hotels GmbH (B+/ Stable). FIVE and One
Hotels are rated higher than AccorInvest due to expected stronger
credit metrics and liquidity. AccorInvest is rated higher than Sani
Ikos Group as Fitch projects it to have lower leverage and better
FCF generation.
Key Assumptions
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Revenue before disposals increasing by 2%-4% a year;
- Asset disposals over 2024-2025, leading to revenue declining by
2% in 2024 and 16% in 2025, and generating around EUR750 million of
cash proceeds
- EBITDA margin increasing by around 200bp over 2024-2027 due to
disposal of less profitable assets and the cost-saving programme
- Capex at EUR220 million-EUR250 million a year over 2024-2027
- EUR200 million preference shares issuance in July 2024;
additional EUR100 million assumed to be issued under Fitch's
disposal proceeds assumptions; all treated as non-debt
- No dividends on ordinary or preference shares
Recovery Analysis
Fitch estimates that AccorInvest would be liquidated in a
bankruptcy rather than restructured on a going-concern basis as
Fitch considers the large tangible asset base, consisting of its
hotels. The liquidation estimate reflects Fitch's view that the
company's hotel portfolio (valued by external third parties as of
June 2024) could be realised in a liquidation scenario and
distributed to relevant creditors upon default. Fitch has applied a
50% advance rate to the EUR8.2 billion AccorInvest gross asset
value after deducting EUR337 million, representing assets secured
by a mortgage security or under finance lease contracts.
Fitch deducts 10% for administrative claims from the resulting
liquidation value. In its analysis, Fitch assumed PGE ranks ahead
of other senior secured debt as the latter is structurally
subordinated. Term loans A and B, the RCF and EUR750 million bond
rank pari passu among themselves. Its waterfall analysis generated
a waterfall generated recovery computation (WGRC) for the senior
secured debt in the 'RR1' band, indicating a 'BB' rating, three
notches above the company's IDR of 'B'. The WGRC output percentage
on current metrics and assumptions is 95%.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action
- Successful realisation of the disposal plan, building up
liquidity and leading to profitability improvements
- EBITDAR net leverage below 6.0x on a sustained basis
- EBITDAR fixed charge cover above 1.7x on a sustained basis
- Positive FCF generation
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action
- EBITDAR net leverage above 6.5x on a sustained basis
- EBITDAR fixed charge cover below 1.5x on a sustained basis
- Negative FCF, reducing available liquidity
Liquidity and Debt Structure
Limited but Improving Liquidity: Fitch assesses AccorInvest's
liquidity as limited as Fitch estimates that cash balance has
reduced due to debt prepayments and transaction costs, while its
EUR250 million RCF remains fully drawn. Liquidity improved after
the bond placement as its proceeds would allow the company to repay
the bridge facility and reduce short-term debt to EUR191 million,
related to the amortisation payment under PGE.
Successful execution of asset disposals may replenish AccorInvest's
cash position, improving liquidity assessment to satisfactory.
Fitch also assumes that the company will receive another EUR100
million from shareholders before March 2025 should its asset
disposal proceeds be lower than expected.
Issuer Profile
AccorInvest is a France-based real estate hotel owner and
operator.
Date of Relevant Committee
September 4, 2024
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
AccorInvest Group S.A.
senior secured LT BB New Rating RR1 BB(EXP)
BELRON GROUP: S&P Cuts ICR to 'BB-' on Dividend Recapitalization
----------------------------------------------------------------
S&P Global Ratings lowered to 'BB-' from 'BBB-' its long-term
issuer credit rating on Luxembourg-based vehicle glass repair and
replacement (VGRR) services company Belron Group S.A. (Belron) and
its issue rating on the group's senior secured term debt. S&P
assigned its 'BB-' issue rating and '3' recovery rating (recovery
expectation: 50%-70%, rounded estimate: 60%) to the new senior
secured debt.
The stable outlook reflects S&P's view that Belron's leading
position in the VGRR market will support robust topline growth,
resilient adjusted margins of about 24% in 2024 and about 25% in
2025, and continued positive free operating cash flow (FOCF) above
EUR700 million annually over 2024-2025.
Belron has announced an extraordinary dividend recapitalization
that will materially increase adjusted leverage to about 5.8x in
2024 and about 5.1x in 2025, from about 3.0x-3.5x in recent years.
Belron plans to issue a $4.66 billion term loan B (EUR4.2 billion
equivalent), a EUR2.05 billion term loan B, and EUR1.85 billion
equivalent of additional senior secured debt, with the debt type
and split of USD/EUR issuance still to be determined. The group
will use the total proceeds of EUR8.1 billion from these new
issuances and existing cash on the balance sheet of about EUR515
million to repay its existing term debt of about EUR4.3 billion and
to make a dividend payment of about EUR4.3 billion to its
shareholders (gross of transaction costs and expenses). The
dividend will be apportioned among the shareholders, according to
their equity ownership in Belron. S&P said, "We expect the group's
existing EUR1.14 billion revolving credit facility (RCF), which is
due in May 2029, will remain undrawn post transaction. We
understand that the new term loans, senior secured notes, and RCF
rank pari passu."
The transaction will increase Belron's adjusted debt to about
EUR8.9 billion in 2024, from about EUR4.75 billion on Dec. 31,
2023. Adjusted leverage will rise to about 5.8x in 2024, from about
3.3x in 2023. S&P said, "Our calculation of Belron's adjusted debt
of EUR8.9 billion for fiscal year 2024 (ends Dec. 31, 2024)
comprises term loans and senior secured notes of EUR8.1 billion,
leasing obligations of about EUR800 million, and U.S.
self-insurance provisions of about EUR50 million (net of tax). Our
adjustments typically result in a differential of about 0.3x-0.5x
between adjusted leverage and the group's reported leverage.
Despite the higher interest burden, the group's funds from
operations (FFO) cash interest coverage should remain robust at
above 2.5x over 2024-2025. At the same time, we expect the group's
FOCF to debt will be 8%-10%, benefiting from Belron's relatively
low capital expenditure (capex) intensity."
S&P said, "Even though we view this transaction as a true one-off
event, the notable increase in leverage led us to revise our
assessment of Belron's financial risk profile to aggressive from
significant.The primary purpose of this transaction is to
facilitate a generational change in the ownership and shareholder
structure of D'Ieteren Group (D'Ieteren), Belron's majority
shareholder. Despite the increase in Belron's debt and the group's
weakening credit metrics, we continue to assess Belron's financial
policy as neutral. This is because we view this transaction as a
true one-off event that is primarily driven by a change in the
shareholder structure at D'Ieteren and therefore not indicative of
Belron's long-term leverage tolerance or financial policy. Belron
has a track record of maintaining leverage at 3.0x-3.5x, despite
previous dividend recapitalizations. The group posted adjusted debt
to EBITDA of 3.3x in 2023, 3.5x in 2022, 3.9x in 2021, and 3.6x in
2020. Post transaction, we expect management will continue to
reduce leverage toward the step-down thresholds set out in its
shareholder agreement. Yet we note that firm legal protections that
prevent future dividend recapitalizations do not exist. We
anticipate that Belron will revert to a more conservative dividend
policy going forward. Due to Belron's track record of lower
leverage, as well as its transparent financial policy and intention
to delever, we consider the group's leverage on a weighted basis
and have revised our assessment of its financial risk profile to
aggressive from significant.
"Governance factors are a moderately negative consideration in our
credit rating analysis of Belron. Belron is owned by family-run
D'Ieteren (with 54.79% of voting rights) and financial sponsors,
including Clayton, Dubilier & Rice (CD&R, 22.26%), Hellman &
Friedman (H&F, 12.37%), GIC (4.42%), BlackRock Private Equity
Partners (3.08%), and founding family and management (3.07%). We
understand that D'Ieteren and the financial sponsors operate as a
true partnership. Even though D'Ieteren has a majority stake in
Belron, veto rights require a joint agreement on all key decisions,
such as shareholder renumeration and management changes. As such,
D'Ieteren cannot direct cash flows in a manner detrimental to the
financial sponsors. Due to the requirement for consent at the
shareholder level, we continue to believe that the financial
sponsors cannot unilaterally impose more aggressive financial
policies. However, we assess risks arising from the group's risk
management and oversight as moderate. This is exemplified by the
group's track record of dividend recapitalizations and shareholder
remunerations that prioritize the interests of the controlling
owners.
"We expect Belron's operating performance will remain strong over
2024-2025, with EBITDA margins continuing to rise. We project that
robust demand, price increases, and careful cost control will
increase Belron's revenues above EUR6.4 billion in 2024. At the
same time, we expect that the group's adjusted EBITDA margins will
strengthen to about 24% and that Belron will generate FOCF above
EUR700 million. For 2025, we expect revenues above EUR6.8 billion,
an increase in margins to about 25%, and FOCF generation similar to
that in 2024. As profitability strengthens, we also expect leverage
will gradually improve. We believe Belron will target to reduce
leverage toward the step-downs in maximum leverage permitted in the
shareholder agreement. We forecast adjusted leverage of about 5.8x
in 2024 and about 5.1x in 2025.
"We continue to assess Belron's business risk profile at the higher
end of the satisfactory category.Increasingly complex windscreen
technology and surging sales of complementary products will
continue to benefit the group. Recalibration jobs on windscreens
with advanced driver-assistance system (ADAS) technology provide a
significant opportunity, given that the penetration rate--or
percentage of ADAS calibration jobs per windscreen jobs--amounted
to about 36% in 2023 (versus 30% in 2022, 24% in 2021, 17% in 2020,
and 11% in 2019). As increasingly complex vehicles are rolled out,
we think this rate will gradually increase, because Belron is well
positioned to capitalize on this growth area. This is because the
group benefits from pre-existing investments in calibration
capabilities and trained technicians, both of which could help
increase profitability over the medium term through economies of
scale and an increase in the average profit per job. We view
positively that Belron continues the gradual expansion of its
adjusted EBITDA margins, as management continues to implement
careful cost controls.
"In our view, the risks of a potential slowdown in VGRR volume
growth are counterbalanced by the group's leadership position in
the VGRR sector and the continually increasing complexity of
windscreen technology, which leads to higher prices.During the
COVID-19 pandemic, Belron was able to mitigate the decline in sales
from decreasing job volumes through a favorable product mix,
increasing technological complexity, and additional sales of
complementary products, such as windscreen wipers and rain
repellents. In our view, the latter are relatively price-inelastic
and can be offered for a mark-up. Furthermore, the attachment
rate--or percentage of customers buying a retail product, such as
wipers--increased to 24% in 2023, from about 10% in 2017,
highlighting the group's ability to cross-sell when customers bring
in their vehicles for a VGRR job.
"We assigned our negative comparable rating analysis, mainly due to
the very significant debt increase.We note that adjusted leverage
will exceed 5.0x through 2025. Even if we consider the group's
strong track record of deleveraging through free cash flow and
EBITDA growth, weighted average debt to EBITDA of about 4.7x
remains at the weaker end of the aggressive financial risk profile
category. We calculate the group's leverage on a weighted basis
over 2022-2026. We also note that firm legal protections in the
shareholder agreement that would prevent the shareholders from
agreeing to future special dividends do not exist.
"The stable outlook reflects our view that Belron's leading
position in the VGRR market will support robust topline growth,
resilient adjusted margins of about 24% in 2024 and about 25% in
2025, and continued positive FOCF above EUR700 million annually
over 2024-2025."
S&P could take a negative rating action on Belron if:
-- Adjusted net debt to EBITDA does not recover swiftly to less
than 5.0x on a sustained basis; and
-- A decline in profitability deteriorates the group's competitive
position and reduces its market shares.
S&P could raise the ratings if the group and its shareholders
commit to continue deleveraging and build a track record of
adjusted net debt to EBITDA comfortably below 4.5x over a prolonged
period.
=====================
N E T H E R L A N D S
=====================
CUPPA BIDCO: S&P Lowers LongTerm ICR to 'CCC+', Outlook Stable
--------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Cuppa Bidco B.V. to 'CCC+' from 'B-'.
S&P said, "We also lowered our issue ratings on the company's term
loans to 'CCC+' from 'B-'. The recovery rating of '3' is unchanged,
indicating recovery prospects of about 50%-70% (rounded estimate
55%) in the event of default.
"The stable outlook reflects our expectation that Lipton's credit
metrics and cash flow generation will slowly improve in 2025. This
leads to a gradual improvement in company's liquidity position
supported by lack of near-term debt maturities."
Lipton Teas and Infusions, a subsidiary of ultimate parent Cuppa
Bidco B.V., has experienced sizeable operating pressures and volume
decline (down 16.4% in 2023 and 10.3% in the first half 2024,
excluding Tea Estates sold in first quarter of 2024). This resulted
in much weaker-than-anticipated operating performance.
S&P said, "The downgrade reflects our expectation for weaker credit
metrics and negative annual FOCF generation due to multiple
operational and market headwinds. For the first half of 2024
(ending June 30, 2024), Lipton's results were weaker than
anticipated, with revenue contracting about 7.5% year over year to
about EUR800 million due to volume decline of about 10% (excluding
Tea Estates the company sold in first quarter 2024), only partially
offset by positive pricing of about 4%. Major volume pressure in
Pakistan, Egypt, and Saudi Arabia (accounting for about 80% of
volume decline) drove this decline, stemming from higher
competition from local players and loss of some retail
distributions due to change in price and SKU rationalization.
"At the same time, some supply constraints due to the Red Sea
crisis; large, unexpected foreign currency exchange devaluation (in
particular Euro against Egyptian and Nigerian domestic currencies);
higher overheads costs following the separation process from
Unilever; and heavy delisting of several SKUs (the most of these
had the expected impact, but a small part resulted in unexpected
distribution losses, which management is currently addressing)
caused a major downward revision of the company's guidance for
full-year 2024. Management aims to recoup some of the unexpected
distribution losses from the delisting of certain SKUs by
reintroducing a number of them. Lipton's new outlook for 2024
assumes revenue will contract low-single-digit percent (compared to
above 10% growth previously), reported free cash flow negative for
EUR200 million – EUR250 million (neutral or slightly positive
previously), and reported EBITDA of about EUR310 million (above
EUR400 million previously).
"Under our base case, key credit metrics for 2024 are thus
significantly weaker than our previous expectations. We now
estimate S&P Global Ratings-adjusted debt to EBITDA of around 10x
(compared to 7.5x in previous forecasts) and FFO cash interest
coverage at 1.0x (around 1.5x previously). Lower EBITDA base, large
negative working capital movements, and a high amount of cash
interest payment will lead to negative cash flow generation.
"We note Lipton has a substantial annual cash burden of over EUR300
million related to cash interest and capital investment. In line
with company's budget, our base case assumes a good recovery in the
second half of 2024. We understand the company is focusing on
regaining distribution to keep scale, some promotional activities,
reintroducing select SKUs, and reducing overheads costs 25%-30% in
the second half of 2024 compared with the first.
"We forecast adjusted EBITDA to gradually improve in 2025, although
we assume annual FOCF to remain negative with a slow deleveraging
trend.Under our new base-case projections, we assume modest annual
revenue growth, primarily stemming from gradual stabilization in
volumes, regaining some distribution contracts, and modest pricing
effect. In our view, moderate volume recovery will likely come from
reintroducing select SKUs to strengthen the portfolio offer
compared with competitors, as well as ongoing marketing activity to
promote brand equity (with marketing costs remaining around 10%-12%
of total sales). We therefore forecast S&P Global Ratings-adjusted
EBITDA to recover to about EUR330 million-EUR340 million in 2025
(up from EUR310 million-EUR320 million expected in 2024, adjusted
for pension expense), assuming reduction of overheads (especially
for IT, personnel, and consulting expenses) and abating inflation.
"As the group prioritizes inventory reduction and renegotiating
with suppliers to extend payment terms, we anticipate working
capital to slowly stabilize. As such, we forecast annual FOCF
generation to improve but remain negative around EUR50
million-EUR60 million next year. We expect annual capex to remain
about EUR50 million given limited growth investments. Thus, we
forecast the group's credit metrics to gradually improve in 2025
but remain weak, with adjusted debt to EBITDA around 9.5x-9.8x. We
view FFO cash interest coverage as a credit weakness, remaining at
around 1.0x in the next 12-18 months.
"Although we assume Lipton has sufficient liquidity over next 12
months, its cash flow and liquidity profile has deteriorated.Its
liquidity position as of June 30, 2024, includes available cash
(EUR103 million) and the availability of EUR50 million under its
EUR375 million revolving credit facility (RCF) due in December
2028. Negative FOCF generation in the first half of the year
hindered Lipton's liquidity position."
In April 2024, the group issued a new incremental term loan B of
EUR175 million, due in June 2029, to repay previous drawings under
the RCF. However, due to large working capital requirements and
higher overhead costs, EUR140 million of new drawings were made
under the RCF, with EUR325 million drawn overall as of June 2024.
This leaves the company with limited flexibility under the RCF,
also accounting for reduced covenant headroom (springing covenant)
in case of further drawings.
S&P said, "Positively, we note that there are no short-term
refinancing risks since the next debt maturity will be in June 2029
(EUR1,750 million term loan B and GBP438 million term loan B). To
support liquidity, the company received around EUR25 million-EUR30
million combined from asset disposals in July 2024.
"The stable outlook reflects our expectation that while Lipton will
continue to post negative FOCF in 2024 and 2025, it will maintain
sufficient liquidity to fund its operations over next 12-18 months,
supported by its lack of near-term maturities. The outlook also
reflects our base-case assumptions of some positive gradual
developments in operating performance starting from the second half
of 2024 thanks to strategic initiatives (SKUs reintroduction, more
targeted promotional activity, and price adjustments) with better
control of working capital and overheads expenses.
"We could lower the ratings in the next 12 months if Lipton's
liquidity position weakens further, such as through a financial
covenant breach due to weaker-than-expected EBITDA generation,
higher working capital volatility, or inability to self-fund
operations with FFO cash interest coverage below 1.0x. We could
also lower our rating if we see heightened risk of default,
including debt exchange offers and similar restructurings that we
deem a distressed exchange.
"We could take a positive rating on Lipton if it generates positive
FOCF on a sustained basis and consistently deleverages, supported
by revenue growth, an improvement in its EBITDA margins, and
stronger FFO interest coverage."
Environmental and social credit factors have no material influence
on S&P's rating analysis for Lipton.
S&P said, "Governance factors are a moderately negative
consideration in our rating analysis of Lipton, as is the case for
most rated entities owned by private-equity sponsors. We believe
the group's highly leveraged financial risk profile points to
corporate decision making that prioritizes the interests of the
controlling owners. This also reflects the generally finite holding
periods and a focus on maximizing shareholder returns."
===========
P O L A N D
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BANK MILLENNIUM: Fitch Rates EUR500MM Unsec. Notes 'BB+'
--------------------------------------------------------
Fitch Ratings has assigned Bank Millennium S.A.'s (BB+/Positive)
EUR500 million senior non-preferred (SNP) unsecured notes (ISIN
XS2905432584) a final long-term rating of 'BB+'. The rating is in
line with the expected rating assigned on September 17 2024 (Fitch
Rates Millennium's Upcoming Green Senior Non-Preferred Notes
'BB+(EXP)').
The notes mature on September 25, 2029, with an optional redemption
date on September 25, 2028. They carry a fixed coupon of 5.308% per
year until the optional redemption date and change afterwards to a
floating rate of 3M EURIBOR + 2.95% margin per year.
The notes are issued under the bank's established PLN3 billion EMTN
programme. The net proceeds from the notes are being used for
activities as described in Millennium's green bond framework and
are intended to qualify as eligible liabilities for the purposes of
minimum requirement for own funds and eligible liabilities (MREL).
Key Rating Drivers
Millennium's SNP debt is rated in line with the bank's Long-Term
Issuer Default Rating (IDR), reflecting its expectations that the
bank will use only SNP and more junior debt to meet its MREL.
On the consolidated level, the bank must comply with MREL set at
20.78% (including the combined buffer requirement of 2.75%) of
risk-weighted assets (RWAs) of the resolution group, which excludes
its mortgage bank subsidiary. At end-1H24, the buffer was 22.92% of
RWAs, comfortably above the requirement.
Millennium's ratings balance the benefits of an established
domestic retail franchise, fairly conservative new loan
underwriting and adequate asset quality against high legal costs
stemming from an above-average exposure to legacy foreign-currency
mortgage loans, which requires significant management attention
(see Fitch Upgrades Millennium to 'BB+'; Outlook Positive dated 28
June 2024).
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The SNP debt rating would be downgraded if the bank's Long-Term IDR
was downgraded.
The SNP debt would also be downgraded to one notch below the bank's
Long-Term IDR if Fitch expects Millennium to use senior preferred
debt to meet its MREL while SNP and more junior debt would not
exceed 10% of the Millennium resolution group's RWAs on a sustained
basis.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The SNP debt rating could be upgraded if the bank's Long-Term IDR
was upgraded.
Date of Relevant Committee
June 27, 2024
ESG Considerations
Millennium has an ESG Relevance Score for Management Strategy of
'4'. This reflects its view of elevated government intervention
risk in the Polish banking sector, which negatively affects the
banks' operating environment and their ability to define and
execute on their strategies. This has a negative impact on the
bank's credit profile and is relevant to the ratings, in
combination with other factors.
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
----------- ------ -----
Bank Millennium S.A.
Senior non-preferred LT BB+ New Rating BB+(EXP)
=========
S P A I N
=========
OBRASCON HUARTE: Moody's Lowers CFR to Caa2, Outlook Negative
-------------------------------------------------------------
Moody's Ratings has downgraded Obrascon Huarte Lain S.A.'s ("OHLA")
corporate family rating to Caa2 from Caa1. Moody's have also
downgraded the probability of default rating and appended a limited
default (LD) designation changing the probability of default rating
to Caa2-PD/LD from Caa1-PD. Concurrently, Moody's have downgraded
the instrument rating of the outstanding EUR406.1 million backed
senior secured notes due 2026 issued by OHL Operaciones S.A.U., a
wholly owned subsidiary of OHLA, to Caa2 from Caa1. The outlook on
OHLA and OHL Operaciones S.A.U. remain negative.
The rating action follows OHLA's announcement on September 20 that
noteholders have approved the company's requested delayed interest
payment. As a consequence, OHLA will be able to pay the interest,
which was originally due on September 15 and September 20,
including the applicable 5 day grace period, on or before October
4. The extension of the interest payment beyond the applicable
grace period is considered a default according to Moody's
definition.
The LD will remain in place until the interest payment will be
cured. The company remains in negotiation with noteholders on the
maturity extension of the bonds.
RATINGS RATIONALE
The rating action reflects:
-- The approval of the delayed interest payment, which constitutes
a default under Moody's definition.
-- The uncertainties over the outcome of the negotiation with
noteholders regarding the maturity extension, which is key to
secure the announced capital increase of EUR150 million and release
of the cash guarantees from the banks. OHLA has already received
EUR130 million binding investment commitments for the capital
increase, which are contingent on the company's ability to reach an
agreement with the banks and the holders of the notes.
-- Weak liquidity in light of current sizeable maturities of
around EUR250 million, including EUR40 million ICO loan due in 2024
and notes due in March 2025. This is partly mitigated by Moody's
expectation that OHLA will generate positive free cash flow in
2024.
The rating continues to reflect Moody's expectation that at current
funding rates, a debt reduction and continued improvement in OHLA
's earnings profile are necessary for its capital structure to
become sustainable. This view reflects the company's low albeit
improving profitability, investments needs in associates and
concessions, and the volatile nature of working capital typical of
the construction business. The proposed capital increase, release
of cash bank guarantees and disposal of both Canalejas and the
Service business are considered as key to reducing the debt load
and improving the sustainability of the company's capital
structure. Negotiations for the disposal of these assets are
ongoing and also exposed to execution risk.
LIQUIDITY
OHLA's liquidity is weak. As of June 2024, the company had around
EUR207 million in cash on hand, excluding cash sitting at
joint-ventures and associates (EUR249 million) and cash used as
collateral (EUR175 million), which is not necessarily immediately
available to the parent for liquidity purposes. Moody's expect the
cash balance together with expected internally generated cash flow
to be sufficient to cover working capital needs and capital
spending (including lease payments) and 2024 debt maturities of
around EUR74 million. However, these sources will not be sufficient
to cover the EUR174 million notes maturing in March 2025, including
PIK. OHLA's next sizeable maturity is the remaining EUR262 million
notes due in March 2026.
OHLA does not have any committed long-term revolving facilities,
which limits room for underperformance in its regular construction
business or larger seasonal working capital swings than currently
anticipated in Moody's forecasts. The current liquidity assessment
does not include the proceeds from the potential disposal of
Canalejas and the Services business unit, albeit Moody's recognise
that these could provide some liquidity buffer.
STRUCTURAL CONSIDERATIONS
OHL Operaciones S.A.U., is an indirect wholly owned subsidiary of
OHLA and is the issuer of the outstanding EUR406 million backed
senior secured notes, which represent the bulk of the debt capital
structure and are therefore rated in line with the CFR. The notes
are guaranteed by operating subsidiaries that generate at least 90%
of the group's revenue and benefit from a customary security
package, including pledge over shares in certain subsidiaries,
certain bank accounts and intercompany receivables.
RATIONALE FOR THE NEGATIVE OUTLOOK
The negative outlook reflects the execution risk around the
negotiation with noteholders.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on the ratings could arise if OHLA (1) reaches an
agreement with noteholders for the refining of the notes due March
2026, and (2) receives the announced capital increase.
Downward pressure on the ratings could arise if (1) OHLA's fails to
address upcoming maturities or, (2) if a higher loss from the
ongoing negotiation with noteholder is expected.
The principal methodology used in these ratings was Construction
published in September 2021.
COMPANY PROFILE
Headquartered in Madrid, Obrascon Huarte Lain S.A. (OHLA) is one of
Spain's leading construction groups. The group's activities include
its core engineering and construction business (including the
industrial division); and the development of concessions in
identified core markets in Europe, North America and Latin America.
In 2023, OHLA generated around EUR3.1 billion in sales and EUR126
million in company-reported EBITDA (excluding the Services
division).
OHLA's main shareholders are the Mexican Amodio family (26%) via
their investments in Forja Capital S.L.U. and Solid Rock Capital
S.L.U. The remaining shares are in free float, traded on the
Spanish Stock Exchanges.
===========
S W E D E N
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DOMETIC GROUP: Moody's Alters Outlook on 'Ba2' CFR to Negative
--------------------------------------------------------------
Moody's Ratings has changed the outlook of Swedish mobile leisure
products manufacturer Dometic Group AB ("Dometic" or "the group")
to negative from stable. Concurrently, Moody's affirmed the
group's Ba2 long term corporate family rating and Ba2-PD
probability of default rating and the Ba2 instrument ratings on its
3.0% EUR300 million and 2.0% EUR300 million senior unsecured bonds
due 2026 and 2028, respectively.
RATINGS RATIONALE
The outlook change to negative reflects the expectation of
weakening sales and profitability going forward, in light of the
group's elevated financial leverage, while Moody's still positively
recognize Dometic's strong liquidity and free cash flow generation
ability. The rating action was prompted by Dometic's announcement
on 17 September 2024 that it expects a significant 15%
year-over-year (yoy) drop in group sales in the third quarter of
2024 (Q3 2024). Moreover, the group expects its EBITA margin
(before items affecting comparability) in the same period to narrow
to 8%-9% from 14.0% in the previous quarter or 14.3% in Q3 2023.
The disappointing sales and margin expectations primarily reflect
sluggish economic conditions and end-consumer demand with slowing
purchasing activity of customers and continued de-stocking at
distributors. The group also indicated that it does not expect
market conditions to improve through the reminder of this year as
visibility into a near-term demand recovery remains clouded.
Given the lower sales and margin guidance and likely ongoing weak
demand from recreational vehicle (RV) original equipment
manufacturers (OEMs) also into 2025, Moody's expect that Dometic's
profitability will remain weak for the Ba2 rating category over the
next 12-18 months. Moody's now forecast its Moody's adjusted EBITA
margin to reduce towards 11.5% in 2024 from 12.9% for the 12 months
ended June 2024, which compares weakly versus Moody's minimum
expectation in the low teens in percentage terms for a Ba2 rating.
Moody's project the margin to gradually improve, but remain just
below this guidance at around 12.5% also next year. While demand
from OEMs will likely stay weak in most regions for some more
quarters, Moody's expect the profitable services and aftermarket
business to recover and distributors to start re-building
inventories in 2025. Nevertheless, owing to the limited visibility
into improving demand from OEMs and consumer sentiment, Moody's
expect Dometic's sales to be flat and see only limited potential
for considerable profit growth in 2025. In that respect, Moody's
note the group's confirmed focus on reducing costs and improve
efficiencies. This bears some risks of additional restructuring,
related extra costs and execution risk in the short term, in
Moody's view.
Moody's revised earnings forecast leads to a delay in the reduction
of Dometic's still-high leverage, exemplified by its Moody's
adjusted gross debt to EBITDA ratio of 4.7x for the last 12 months
(LTM) June 2024. Although Moody's expect the group to use some
excess cash (SEK4.3 billion cash position as of June 30, 2024) and
projected positive free cash flow (FCF) for debt repayments in
2025, Moody's reduced EBITDA forecast will limit the de-leveraging.
Moody's therefore expect Dometic's Moody's adjusted gross debt to
EBITDA to continue to exceed Moody's 4.0x maximum guidance for the
Ba2 rating also in 2025. At the same time, Moody's recognize the
group's much lower Moody's adjusted net leverage (3.6x as of LTM
June 2024) and strong cash generation, supported by expected
further inventory reductions, which also underscores its still very
good liquidity profile.
The affirmed Ba2 CFR continues to reflect the long-term trend of
outdoor leisure activities and mobility, which Moody's believe
remains intact; Dometic's leading market positions, high
profitability and asset light business that allows it to generate
solid positive FCF (after dividends) through the cycle; reduced
exposure to the particularly cyclical RV OEM business (22% of LTM
June 2024 group sales) since 2017 (49%); and conservative financial
policy that remains focused on de-leveraging to a reported 2.5x net
leverage (3.1x as of September 2024 expected by management).
LIQUIDITY
Dometic's liquidity is very good, supported by its SEK4.3 billion
cash position and committed and fully available EUR280 million
revolving credit facility (RCF, maturing in 2027) as of 30 June
2024. These cash sources, combined with Moody's forecast operating
cash flow of more than SEK2.5 billion, significantly exceed
Dometic's basic cash uses over the next 12 months. Such cash needs
comprise SEK2.5 billion short-term debt maturities, capital
spending of around SEK0.9 billion (Moody's-adjusted, including
lease liability payments) and dividend payments of 40% of net
income.
Moody's further expect Dometic to maintain adequate capacity under
its (net leverage and interest cover) financial covenants over the
next 12 months.
OUTLOOK
The negative outlook reflects Dometic's currently weak credit
metrics, especially as to profitability and leverage, which Moody's
expect to return to just adequate levels for the Ba2 rating
category over the next 18 months. As such, a prolonged weakness in
the RV OEM business and/or services and aftermarket demand,
resulting in a further decline in Dometic's sales and profitability
over the next few quarters would likely exert downgrade pressure on
the rating. In addition, any signs of a deterioration in Domestic's
liquidity or its ability to maintain compliance with financial
covenants could prompt a downgrade.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider downgrading the ratings, if Dometic's
Moody's adjusted debt/EBITDA failed to decline to below 4x, Moody's
adjusted FCF/debt decreased towards 5%, or if its Moody's adjusted
EBITA margin failed to reach low teens in percentage terms.
Furthermore, a material weakening of the group's liquidity could
result in negative rating pressure.
Positive ratings pressure would build if Dometic's Moody's adjusted
debt/EBITDA decreased towards 3.0x and its Moody's adjusted
EBITA-margin increased to over 15%. Furthermore, an upgrade would
rest on a sustained balanced financial policy.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Manufacturing
published in September 2021.
COMPANY PROFILE
Dometic Group AB (Dometic), headquartered in Solna, Sweden, is a
leading global manufacturer of various products in the areas of
Food & Beverage, Climate, Power & Control and Other Applications.
Dometic operates in the Americas, EMEA and Asia Pacific, providing
products for use in recreational vehicles, trucks and premium cars,
pleasure and workboats, and for a variety of other uses. The group
manufactures its products across 25 manufacturing sites in 11
countries under various brands, including its core Dometic and
other supporting brands.
In the 12 months through June 2024, Dometic generated revenue of
about SEK26 billion and reported EBITDA of SEK4.2 billion (16.0%
margin). The group is listed on the Stockholm Stock Exchange with a
market cap of around EUR2 billion as of September 23, 2024.
STORSKOGEN GROUP: S&P Affirms 'BB' ICR & Alters Outlook to Stable
-----------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
affirmed its 'BB' long-term issuer credit rating on Sweden-based
conglomerate Storskogen Group AB.
S&P said, "The stable outlook reflects our expectation that
Storskogen's FFO to debt will stabilize around 19% in 2024 and
increase to about 21% in 2025 while debt to EBITDA remains
comfortably below 4.0x as the company mitigates macroeconomic
pressures with tight control over cash flows, debt reduction, and
divestment of low-margin companies.
"We forecast that Storskogen's earnings will reach a trough in
2024. After several quarters of decline, Storskogen's last-12-month
EBITDA (as defined by the company, pro forma acquisitions and
divestments), stabilized in the second quarter of 2024. Organic
growth turned mildly positive in the second quarter, after four
quarters in negative territory. Profitability remained hindered by
weak volumes, but this was offset by price increases and
operational efficiencies, leading to a stable year-on-year
company-adjusted EBITA margin of 9.7%. For full-year 2024, we
forecast a 7% decline in revenues, to Swedish krona (SEK)33.6
billion, and 3% decline in S&P Global Ratings-adjusted EBITDA, to
SEK4.1 billion, because of still-subdued construction sector and
consumer sentiment--to which a multitude of companies within
Storskogen group are highly exposed. Our forecast also includes the
completed divestment of nine companies which, although contributing
positively to Storskogen's EBITDA, were a drag on profitability.
For 2025, our base case factors in GDP growth of about 2.0% and
inflation moderating at 2.0% in Sweden, where the company generates
46% of revenue. This, along with the company's solid order book in
the industry segment, should support organic growth of about 4%,
while volume recovery and the full year effect of the divestment of
underperforming companies will support a 60-basis-point margin
increase."
The company's efforts to strengthen cash flow generation and reduce
debt will drive moderate deleveraging. The company has reduced its
working capital to about 15% of sales, from 17.5% two years ago. It
has also reduced its interest-bearing debt which, combined with
partial interest-rate hedging, has alleviated the interest burden
from increased interest rates. Together with contained capital
expenditures, these efforts to boost cash flow generation will
support broadly stable leverage metrics in 2024, despite lower
EBITDA. S&P said, "We project free operating cash flow (FOCF) of
about SEK1.6 billion, S&P Global Ratings-adjusted debt to EBITDA of
around 3.1x, and FFO to debt of around 19%. In 2025, we forecast
deleveraging to 2.7x debt to EBITDA and about 21% FFO to debt,
underpinned by EBITDA growth and further net debt reduction. These
forecasts are also supported by the company's intention not to
revive its mergers and acquisitions (M&A) strategy before leverage
has declined to the lower end of its 2x-3x interest-bearing net
debt-to-EBITDA target, alongside improved organic performance."
Storskogen continues to proactively extend its debt maturities. In
May, Storskogen issued senior unsecured bonds of SEK1.25 billion,
with 3.5 years maturity, to redeem an equivalent amount of its
SEK3.0 billion notes due December 2025. Earlier in the year, it
refinanced its EUR115 million outstanding term loan maturing in
March 2025 and its EUR1 billion revolving credit facility (RCF),
maturing in September 2025, with a EUR330 million 2.5 year-maturity
term loan and a EUR400 million three year-maturity RCF with an
extension option of up to two years and an accordion option of
EUR43 million. S&P sees this proactive and successful refinancing
of upcoming debt maturities as credit positive, mitigating the
company's short-dated capital structure in comparison with
similarly rated companies, with weighted average debt maturity just
above two years.
The stable outlook reflects S&P's expectation that Storskogen's FFO
to debt will stabilize around 19% in 2024 and increase to about 21%
in 2025 while debt to EBITDA remains comfortably below 4.0x as the
company mitigates macroeconomic pressures with tight control over
cash flows, debt reduction, and divestment of underperforming
companies.
Downside scenario
S&P could lower the rating in the next 12 months if:
-- The group suffers operational underperformance or if it
undertakes more debt-funded M&A or shareholder-friendly actions
than S&P anticipates, resulting in leverage increasing above 4.0x
or FFO to debt not expected to rise above 20%.
-- Storskogen experiences operating difficulties for a prolonged
period, resulting in a more volatile operating performance without
short-term recovery prospects.
-- The group fails to take necessary actions to address the
refinancing of the debt maturities due 2025 in a timely manner.
-- Storskogen fails to continue upstreaming its FOCF from
subsidiaries to the parent, or the number of entities reduces
across its cash-pooling mechanism.
Upside scenario
Although unlikely in the next 12 months, given Storskogen's
leverage tolerance, we could consider an upgrade if the company
reduces S&P Global Ratings-adjusted debt to EBITDA below 3.0x and
strengthens FFO to debt above 30%, with a sufficient cushion for
further M&A activities and management's commitment to maintain
this. An upgrade would imply a sustained improvement in
Storskogen's operating performance, including solid organic growth
and at least stable EBITDA margins. In addition, S&P would expect
the company to take necessary actions to improve its weighted
average debt maturity profile sustainably.
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of Storskogen,
reflecting our view that management's decisions and actions
underline a higher risk tolerance than we initially perceived.
Although the completed refinancing of its term loan and RCF, and
partial refinancing of its bond due in 2025, somewhat spreads out
its debt maturities, we still capture the group's liquidity risk
tolerance and appetite for leverage, as demonstrated by the high
pace of investments for external growth in 2022, while the group
experienced operating underperformance including large working
capital cash outflows. In addition, we consider that the
concentration of voting rights in the hands of a limited number of
key people -- with three co-founders and one member of senior
management holding 52.6% -- who own less than 15% of the share
capital, could negatively influence corporate decision-making and
promote the interests of the controlling owners above those of
other stakeholders. We believe the board composition partly offsets
this risk, given that four out of five board members are considered
independent from the company and its management, but we note that
co-founder and head of M&A, Alexander Bjärgard, is also a board
member. We also question the group's ability to ensure adequate
governance given the historic very high pace of acquisitions,
although we are not aware of any governance deficiencies at this
stage."
=====================
S W I T Z E R L A N D
=====================
BCP VII JADE: S&P Affirms 'B' LongTerm ICR & Alters Outlook to Pos.
-------------------------------------------------------------------
S&P Global Ratings revised its outlook on Cerdia's parent BCP VII
Jade Topco (Cayman) Ltd. to positive from stable, affirmed its 'B'
long-term issuer credit rating, and assigned its 'B' issue rating
to the proposed $800 million senior secured notes.
The positive outlook on the long-term issuer credit rating reflects
S&P's anticipation that Cerdia will generate robust free cash flows
and its commitment to maintain its S&P Global Ratings-adjusted debt
to EBITDA below 4.5x.
Switzerland-based producer of acetate filter tow and acetate flakes
intends to raise $800 million of senior secured notes to redeem its
existing senior secured notes and fund a shareholder distribution.
S&P said, "Cerdia's intention to issue $800 million senior secured
notes, will modestly re-leverage the company, in our view at
reasonable levels. The proceeds from the notes will fund the
redemption of the $552 million existing facilities (including $531
million of principal outstanding and $21 million of accrued
interest), a one-time distribution of capital to shareholders, and
transaction fees and expenses. We therefore expect S&P Global
Ratings-adjusted debt to EBITDA to increase to 4.0x-4.3x in
2024-2025 from the 3.0x reported in 2023. We do not net the cash as
part of our leverage calculation because of the private-equity
sponsor ownership. As part of the transaction, Cerdia will also
extend its existing undrawn super senior revolving credit facility
(RCF).
"We anticipate that Cerdia's EBITDA will remain healthy in the next
quarters. The company's last-12-months consolidated EBITDA
increased by 76% on a yearly basis, driven by higher filter tow
selling prices and stable volumes. We do not anticipate a
significant decline in prices in the short term, given the tight
supply demand balance in the global filter tow market. Volumes for
the next 12 months are largely secured thanks to multi-year
contracts with key accounts. Given the high filter tow selling
prices and the recent cost structure optimization, S&P Global
Ratings-adjusted EBITDA margin should remain healthy at around
34%-35% in 2024-2025. This would keep EBITDA elevated at $240
million-$270 million in 2024-2025.
"Above average profitability and limited large expansion project
continue to support Cerdia's strong free operating cash flows
(FOCF). We anticipate FOCF will remain elevated at $85 million-$95
million in 2024-2025, compared with $95 million in 2023. We
understand that Cerdia will continue focusing on strategic projects
to optimize and improve production efficiency and to improve energy
efficiency at its plant in Germany, which relies on natural gas.
Besides energy efficiency and the biomass power plant project in
Germany, Cerdia will also spend on safety and processes as part of
its approximately $40 million per year capital expenditure (capex)
planned for 2024 and 2025.
"We believe that the private-equity owner is less likely to
significantly re-leverage the company at elevated levels. The
outlook revision also reflects our understanding that the
private-equity owner intends to maintain Cerdia's S&P Global
Ratings-adjusted debt to EBITDA below 4.5x, given the specificities
of the business. With additional track record, an S&P Global
Ratings-adjusted debt to EBITDA below 4.5x would be commensurate
with a higher rating.
"We note that as part of its debt documentation, Cerdia is allowed
to pay dividends as long as its total net leverage ratio (as
defined in the credit agreement) does not exceed 3x on a pro forma
basis and that dividends do not exceed 50% of the company's net
income. We do not rule out additional dividend payments in the
future, which would modestly re-leverage the company while
maintaining the S&P Global Ratings-adjusted debt to EBITDA below
4.5x.
"The positive outlook reflects our view that Cerdia will generate
robust free cash flows and its commitment to maintain its S&P
Global Ratings-adjusted debt to EBITDA below 4.5x.
"We could raise the ratings if Cerdia builds a track record of
stronger leverage metrics. Under this scenario, Cerdia would
maintain adjusted debt to EBITDA below 4.5x."
S&P could revise the outlook to stable over the next 12 months if:
-- S&P Global Ratings-adjusted debt to EBITDA exceeded 4.5x;
-- Filter tow prices declined significantly; or
-- If Cerdia lost an important customer, leading to a significant
pressure on profitability and weaker FOCF.
CERDIA HOLDING: Moody's Alters Outlook on 'B2' CFR to Positive
--------------------------------------------------------------
Moody's Ratings affirmed the B2 corporate family rating and B2-PD
probability of default rating of Cerdia Holding S.a r.l. (Cerdia).
In the same action Moody's assigned a B2 rating to the proposed
7-year $800 million guaranteed senior secured notes issued by its
financing subsidiary Cerdia Finanz GmbH. Cerdia will use proceeds
from the offering and cash on hand to repay its existing B2 rated
$600 million senior secured notes, fund a $275 million shareholder
distribution and pay related fees and expenses. The ratings
incorporate Moody's expectation that the company will execute on
the proposed refinancing and that Moody's would withdraw the
ratings on the legacy notes upon repayment. The outlook on both
entities was changed to positive from stable.
RATINGS RATIONALE
The affirmation of Cerdia's ratings and positive outlook reflect
its improved operating performance over the last year, staggered
multi-year customer contracts, good volume visibility and
prospective positive free cash flow generation, which contributes
to Moody's view that the company could sustain leverage and
interest coverage commensurate with the B1 rating category
notwithstanding the higher gross debt. During the remainder of 2024
and into 2025, Moody's expect Cerdia to have stable operating
performance supported by its blue chip customer base and high level
of contracted volumes (100% for 2024 and around 85% for 2025).
Giving effect to the proposed refinancing, Moody's estimate
Cerdia's pro forma debt-to-EBITDA at around 3.5x, with
EBITA/interest coverage around 3.25x, as of the LTM period to June
30, 2024. These metrics incorporate Moody's adjustments for leases,
pensions and an estimate of factoring utilisation around $60
million. While still currently operating and part of the company's
reported revenue and EBITDA, it is unclear how long Cerdia's plant
in Russia will remain operational. Excluding estimates for its
Russian operations Moody's estimate the company's leverage would be
around 3.75x.
The company's modest revenue and very narrow product portfolio
focused on an end market that is structurally challenged
(combustible tobacco), constrains the ratings. Cerdia also has high
customer concentration, with its top five key accounts representing
over 60% of it's volumes, and low operational flexibility with few
production facilities and most filter tow is produced at the
Freiburg site in Germany. Additionally, the consolidated customer
base and the ongoing decline in combustible cigarette volumes
exposes the filter-tow market to future price pressure.
Cerdia's top three position in the filter tow industry, which is
protected by high entry barriers; its vertically integrated
business; the fairly predictable end user tobacco market over at
least next several years, with good revenue visibility based on
multi-year customer contracts; and its strong EBITDA margin in the
high-20 to low-30 percent range historically (Moody's adjusted)
support the rating. Cerdia's volumes are also supported by the fast
growing heat-not-burn filter tow segment. The company also has low
capex requirements, which results in capacity for solid free cash
flow.
LIQUIDITY
Pro forma for the bond issuance, Cerdia's liquidity is good, with
around $35 million cash on balance sheet and an undrawn EUR65
million RCF due in 2029.
The RCF has a springing leverage maintenance covenant of 7.5x, only
tested if the facility is utilised for more than 40%. Moody's
expect the RCF to remain undrawn and Cerdia 's leverage to remain
well in compliance, if it were to be tested, over the next 12-18
months.
STRUCTURAL CONSIDERATIONS
The $800 million senior secured bonds rank are rated in line with
the CFR at B2 and represent the preponderance of the company's
capital structure. The EUR65 million super senior RCF (unrated)
benefits from priority over the proceeds from assets in an
enforcement scenario.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade of Cerdia's ratings include:
(i) Moody's adjusted debt/EBITDA around 3.5x and EBITA/interest
sustained above 2.5x; (ii) FCF/debt sustained in the high single
digits; (iii) good liquidity; (iv) increasing diversification of
the company's customer concentrations and filter tow end-market
exposure; coupled with a further track record of maintaining
margins and revenue at current levels; (v) conservative application
of free cash flow between gross debt reduction and shareholder
returns.
Factors that could lead to a downgrade of Cerdia's ratings include:
(i) Moody's adjusted debt/EBITDA sustained above 5.0x; (ii)
EBITA/Interest coverage below 2.0x; (iii) EBITDA margin declining
below 20%; (iv) free cash flow turns materially negative; (v) the
company's liquidity deteriorates.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Manufacturing
published in September 2021.
COMPANY PROFILE
Cerdia is a leading supplier of cellulose acetate filter tow, a
critical component used by tobacco companies for cigarette filters,
with expected net sales of $779 million in 2023. Acetate filter tow
represented more than 89% of 2023 revenues, with the rest split
between acetate flakes mainly used for cigarette filters (9%) and
sale from other products and services (2%). Cerdia's four plants
are located in Germany, Russia, Brazil and the US. The company was
spun-off from Solvay SA, which sold it to private equity fund
Blackstone via an LBO deal 2017.
===========================
U N I T E D K I N G D O M
===========================
ASSURANCE CARE: Opus Restructuring Named as Administrators
----------------------------------------------------------
Assurance Care Limited was placed in administration proceedings in
the High Court of Justice, Court Number: CR-2024-005221, and Jack
Callow and Stella Davis of Opus Restructuring LLP were appointed as
administrators on Sept. 13, 2024.
Assurance Care, trading as Assurance Nursing & Employment Agency,
is a temporary employment agency. It specializes in residential
care activities.
Its registered office and principal trading address is at 57-59
Whitehorse Road, Croydon, Surrey, CR0 2JG.
The administrators can be reached at:
Jack Callow
Stella Davis
Opus Restructuring LLP
6th Floor, Broad Quay House
Broad Quay, Bristol
BS1 4DJ
For further information, contact:
Sakshi Meht
Email: sakshi.mehta@opusllp.com.
Tel No: 0117-428-8705
BELRON GROUP: Moody's Cuts CFR to 'Ba3' & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Ratings has downgraded Belron Group SCA's (Belron or the
company) long-term corporate family rating to Ba3 from Ba1 and the
probability of default rating to Ba3-PD from Ba1-PD. The company is
a leading provider of vehicle glass repair, replacement and
recalibration services in Europe, North America, and Australasia.
Concurrently, Moody's have downgraded to Ba3 from Ba1 the
instrument ratings on all the currently outstanding backed senior
secured term loans issued by Belron Finance 2019 LLC, Belron
Finance US LLC, Belron Luxembourg S.a.r.l. and on the EUR1,140
million backed senior secured revolving credit facility (RCF) in
the name of Belron Finance Limited. The outlook was changed to
stable from ratings under review.
Moody's have also assigned Ba3 instrument ratings to the new $4,690
million backed senior secured loan borrowed by Belron Finance 2019
LLC and the new EUR2,050 million backed senior secured loan
borrowed by Belron UK Finance Plc. The proceeds from the
transaction, alongside additional issuance of senior secured debt
and EUR515 million of current cash on balance sheet, will be used
to repay all of the currently outstanding senior secured debt
within the group and fund a EUR4.4 billion distribution to
shareholders. The outlook on Belron UK Finance Plc is stable.
The following factors drove these rating actions, which conclude
the review initiated on September 11, 2024:
-- The formal launch of the proposed dividend recapitalisation
transaction, which Moody's estimate will lead to an increase in
proforma Moody's-adjusted Debt/EBITDA for the last 12 months ending
June 30, 2024, to 6.1x from the current level of 3.5x and proforma
Moody's-adjusted EBITA/Interest expense to decrease to around 2x
from 4.2x.
-- The departure from the company's previous financial policy of
publicly stated net leverage caps, which was intended to decrease
to a net leverage (as reported by the company) of 3.0x at the start
of 2025.
Governance considerations were a key driver of the rating actions.
The significant increase in the company's leverage, as well as the
departure from a financial policy which previously capped reported
net leverage, has been considered in the rating action.
RATINGS RATIONALE
Belron's Ba3 CFR reflects the deterioration in the company's credit
profile, following the addition of approximately EUR3.8 billion of
debt to fund an extraordinary dividend to shareholders, as well as
the departure from the company's previous financial policy of
publicly stated leverage caps which would have seen net leverage
(as reported by the company) at a maximum level of 3.0x from the
start of 2025. Although Moody's view a transaction of this
magnitude as being of exceptional nature, the higher debt quantum
relative to the end of June 2024 results in a proforma
Moody's-adjusted debt/EBITDA ratio of 6.1x and a Moody's-adjusted
EBITA/Interest expense ratio of 2.0x.
The ratings also reflect Moody's expectation that the company will
be able to reduce its Moody's adjusted debt/EBITDA towards 5.2x by
the end of 2025 as a result of continued improvement in operating
performance driven by higher recalibration penetration, cost
savings and increased pricing. At the same time, Moody's consider
that Belron's free cash flow generation capacity is now lower than
in recent years due to the increased interest cost resulting from
the additional debt together with expected further shareholder
distributions from 2025 onwards.
Belron sustained a multi year strong track record during the first
half of 2024, with revenue and company-reported EBITDA increasing
respectively by 7% and 3%, from a year earlier. The significant
top-line growth was driven by a mix of increased jobs volume,
higher average job price and continuous recalibration penetration.
Moody's expect industry dynamics to remain supportive over the next
12 to 18 months, especially through the continued increase in the
penetration of Advanced Driver Assistance Systems (ADAS) in the car
parc, growing windscreen complexity and premiumisation of the car
parc.
The Ba3 CFR is also supported by the company's (1) stable business
model underpinned by the largely non-discretionary nature of its
service; (2) leading market positions across diversified
geographies with limited competitors in mainly fragmented markets;
(3) well established relationships with large insurers; and (4)
stable organic through-the-cycle growth rates, supported by
premiumisation and higher complexity of works, despite flat volumes
of the auto parc in a few developed markets.
On the other hand, the CFR is constrained by (1) the company's
limited product diversity and the execution risks involved in
diversifying into new markets; (2) risk of price pressure on
contract renewals, mitigated by a solid track record of average
price per job growth across all the key markets in the last several
years; and (3) the material proportion of business not covered by
insurers which is vulnerable to competitors and postponement during
economic downturns.
ESG CONSIDERATIONS
Belron's CIS-4 indicates the rating is lower than it would have
been if ESG risk exposures did not exist. The score mainly reflects
exposure to governance risks stemming from high leverage,
concentrated ownership and a history of debt-funded dividends which
resulted in a G-4 Issuer Profile Score (IPS). On the other hand,
these risks are partially mitigated by a track record of consistent
strong and improving operating performance.
LIQUIDITY
Belron's liquidity remains good. Although a large portion of the
current cash balance will be used as part of the transaction, the
company has access to its fully available EUR1,140 million RCF due
2029. At the same time, despite the increase in interest cost as a
result of the higher debt load and the intention to continue to
pursue shareholder distributions, Moody's expect free cash flow
generation to be around EUR200-250 million in 2025. Moody's also
expect the company to have adequate headroom under the springing
covenant, which is tested if the RCF is drawn by more than 40%.
STRUCTURAL CONSIDERATIONS
The Ba3-PD PDR is aligned with the Ba3 CFR as typical for capital
structures with first lien bank debt with only a springing
covenant. The senior secured term loans and RCF are rated Ba3, also
in line with the CFR, reflecting their first priority pari passu
ranking and the sharing of the same security package.
COVENANTS
Moody's understand the notable terms of the term loan documentation
will include the below, however the final terms may be materially
different.
Guarantor coverage will be at least 80% of consolidated EBITDA
(determined in accordance with the agreement) and will include
wholly-owned subsidiaries representing 5% or more of consolidated
EBITDA incorporated in England & Wales, France, Germany, Luxembourg
and the US. Security includes all assets of Belron Finance 2019 LLC
and the US guarantors, a floating charge over assets in England &
Wales and key shares.
Incremental facilities are permitted up to 100% of EBITDA.
Unlimited pari passu debt is permitted up to a cons. senior secured
net leverage ratio (SSNLR) of 5.0x or if the SSNLR is not made
worse after the transaction.
Any restricted payment is permitted up to a SSNLR of 4.5x (with
step-downs if funded from the available amount). Permitted
investments are allowed if (i) the SSNLR is 5.0x or lower; (ii) the
SSNLR is not made worse; (iii) the fixed charge coverage ratio
(FCCR) is greater than 2.0x; (iv) the FCCR is not made worse; or
(v) if funded from the available amount. Junior debt repayments are
permitted if the SSNLR is 5.0x or lower (with step-downs if funded
from the available amount). Asset sale proceeds are only required
to be applied in full (subject to exceptions) where the SSNLR is
5.0x or greater.
Adjustments to consolidated EBITDA include cost savings and
synergies capped at 30% of EBITDA and projected to be realised
within 36 months.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's expectations of continued solid
operating performance including growth in revenues and EBITDA, as
well as improving profitability margins, leading to
Moody's-adjusted debt/EBITDA decreasing to around 5x over the next
18 months. The outlook also reflects Moody's expectations of
positive free cash flow generation and that the company will not
pursue any further dividend recapitalisation during that period.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade could be considered in the event of Belron
continuing to sustain solid revenue and earnings growth while also
(i) the company's Moody's Ratings-adjusted debt/EBITDA decreases
sustainably towards 4.5x and, (ii) Moody's-adjusted EBITA/Interest
Expense increases sustainably above 3x, and (iii) the company
maintains a good liquidity profile while generating positive free
cash flow.
Conversely, the ratings could be downgraded in the event that (i)
Moody's Ratings-adjusted debt/EBITDA remains above 6.0x for a
prolonged period of time, or (ii) there is a sustained decline in
organic revenue or profitability, or (iii) Moody's Ratings-adjusted
EBITA/Interest Expense falls materially below 2.25x, or (iv) the
company generates negative free cash flow, (v) or the company's
liquidity profile deteriorates significantly.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CORPORATE PROFILE
Belron is the market leader in the vehicle glass repair,
replacement and recalibration industry, with an established
presence in 39 countries. The group operates under several
different brands, with Carglass (Continental Europe), Autoglass
(UK) and Safelite (US) being the most well-known. The VGRR service
range comprises three primary activities: replacement, repair and
recalibration. Belron has a presence across 39 countries, but over
90% of its total revenue comes from its top 10 markets of the US,
France, Germany, the UK, Canada, Australia, Spain, Italy, Belgium,
and the Netherlands. The company generated revenue of EUR6 billion
and EUR1.6 billion of management-adjusted EBITDA in 2023.
The company's main shareholders are the Belgium-based conglomerate
D'leteren Group SA (55%), private equity firms Clayton, Dubilier &
Rice (22%) and Hellman & Friedman (H&F) (12%) and BlackRock, Inc.
(3%, Aa3 negative) and GIC (4%). The remaining shares are owned by
management and the founding family.
COGNITA: S&P Assigns 'B-' Rating to New $450MM Term Loan Add-On
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue rating to the proposed
$450 million (GBP350 million equivalent) term loan add-on, due in
2031, to be issued by Lernen US Finco LLC, a newly incorporated
subsidiary of education provider, Cognita (Lernen Bondco PLC;
B-/Stable/--). S&P assigned a '3' recovery rating to the proposed
add-on, indicating its expectation of meaningful recovery prospects
(50%-70%; rounded estimate: 50%) for debtholders in the event of a
default.
The recovery rating factors in that the proposed term loan add-on
will rank pari passu with the group's outstanding GBP1,062
million-equivalent euro-denominated first-lien term loan due 2029,
and its GBP214.5 million revolving credit facility (RCF) due 2028,
which will also be upsized to GBP300 million as part of the
transaction. The issue and recovery ratings are subject to its
review of the final documentation. In addition, Jacob Holdings,
majority shareholder of the Lernen Bondco group, will inject GBP150
million of equity to support growth, including potential
acquisitions that enhance development of the school portfolio.
Cognita intends to use the proceeds of this transaction to repay in
full the outstanding amount of RCF drawings, settle the deferred
consideration for two previous acquisitions, and pay for new
acquisitions to be closed shortly. It also expects to maintain
sufficient liquidity for potential future acquisitions.
The final amounts and closure of the proposed financing are subject
to successful execution of the transaction. The issue and recovery
ratings are subject to our review of the final documentation.
Based on the above, S&P forecasts the following key credit metrics,
including our adjustments:
-- S&P Global Ratings-adjusted debt to EBITDA of about 7.5x in
2024, with further deleveraging toward 6.0x-6.5x in 2025.
-- Marginally positive adjusted free operating cash flow (FOCF)
after leases in 2024 and 2025, affected by working capital
movements in relation to early fee collections in the U.K.
-- These are in line with the forecast metrics for our stable
outlook on the 'B-' issuer credit rating on Cognita.
Issue Ratings--Recovery Analysis
Key analytical factors
-- The issue rating on the first-lien debt remains 'B-', including
the proposed GBP350 million-equivalent term loan B add-on. The
recovery rating remains '3', reflecting S&P's expectation of
meaningful recovery prospects (50%-70%; rounded estimate: 50%) in
the event of a default.
-- In S&P's view, recovery prospects are affected by the sizable
amount of first-lien debt and the presence of local debt
facilities, which remain high and increased over the second half of
fiscal year 2024. S&P notes that the company remains reliant on
local facilities, which it considers priority debt, thus affecting
the recovery prospects of the first-lien debt.
-- S&P understands the company will continue to invest in
developing new schools and acquisitions, which could enhance EBITDA
generation in the medium term and the potential EBITDA at emergence
in a hypothetical default scenario.
-- In S&P's hypothetical default scenario, it assumes a sharp drop
in private school enrollments for a sustained period, due to weaker
economic conditions, increased competition, and political or
operational shocks, for example, significant reputational damage.
-- S&P values the group as a going concern, due to its
geographically diversified portfolio of schools; good revenue
visibility, given that the average student tenure is longer than
five years; and the strong brand names of its schools.
The pro forma capital structure following the proposed transaction
is as follows:
-- GBP300 million RCF maturing in October 2028;
-- GBP1,062 million-equivalent euro-denominated term loan B,
maturing in April 2029;
-- GBP350 million U.S. dollar-denominated proposed term loan B,
maturing in September 2031; and
-- GBP237 million of local facilities.
Simulated default assumptions
-- Year of default: 2026
-- Jurisdiction: U.K.
Simplified waterfall
-- EBITDA at emergence: GBP179 million.
-- Implied enterprise value (EV) multiple: 6.5x, higher than the
standard industry multiple of 5.5x, owing to private school
operators' better revenue visibility and free cash flow capacity
than other types of enterprise in the business and consumer
services sector.
-- Gross EV at default: GBP1,167 million.
-- Net EV after administrative costs (5%): GBP1,108 million.
-- Estimated priority claims (local debt): GBP237 million.
-- Estimated first-lien claims: GBP1,727 million.
-- Recovery rating: '3' (50%-70%; rounded estimate: 50%)
Note: All debt amounts include six months of prepetition interest.
First-lien claims include the GBP300 million RCF assumed 85% drawn
at default.
EDGE FINCO: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigning its 'B+' long-term issuer credit
rating to U.K.-based parcel delivery company Edge Finco PLC (Evri)
and its 'B+' issue and '3' recovery rating to the proposed term
loan B (TLB).
The stable outlook reflects S&P's expectation of significant EBITDA
growth in fiscal 2025 driven by strong growth in parcel volumes and
cost-saving initiatives.
Following its acquisition by financial sponsor Apollo Global
Management, Edge Finco PLC (Evri) is issuing a GBP900 million
equivalent euro TLB as part of a package comprising GBP1.4 billion
in new debt facilities to finance Apollo's acquisition and
refinance existing debt.
Evri benefits from its cost leadership position in the U.K. parcels
market, which translates into industry leading profitability.
Evri's geographically optimized network includes seven automated
hubs, 26 high productivity depots, about 500 local delivery units
with flexible staffing, and about 16,000 out-of-home locations for
pickup and drop-off. We believe that a key differentiator for Evri
is its highly flexible, scalable, and cost-efficient last mile,
which is operated by up to about 25,000 self-employed couriers. The
couriers are paid per delivery, allowing for flexibility to
increase the headcount during peak times. S&P said, "We understand
that couriers also cover their own costs (including fuel costs),
but they receive benefits that self-employed workers typically
don't receive, such as paid holiday, a pension, parental leave, and
hourly pay in excess of (or at least no lower than) the national
living wage. Evri's efficient operating model enabled it to have an
above-average adjusted EBIT margin of 8% in fiscal 2024, which we
expect to increase to about 10% in fiscal 2025 and fiscal 2026.
This compares favorably with rated postal peers, such as
International Distributions Services PLC (IDS) (2.2% in its latest
fiscal year), PostNL (3%), and bpost (5.8%), and we think its
operating model is difficult to replicate." Evri's margins are also
typically relatively stable since about 80% of its operating costs
are variable, including its last mile delivery fees, which are
nearly 50% of operating costs.
Evri's track record of consistent market share gains illustrates
the competitiveness of its offering. Evri's share of U.K. B2C
parcel volumes (excluding Amazon captive volumes) has risen to 28%
in 2023 from 20% in 2019, and the company expects to gain further
market share over time. Evri's cost leadership enables it to have
extremely competitive pricing at consistently profitable levels,
and it has leading speed of service (excluding Amazon) thanks to
its network, operating model, and late cut-off times (a particular
advantage for next-day deliveries). Evri has also improved its
service quality in recent years, helped by technology enhancements,
for example by directly dealing with end customers through its
website and mobile application and by couriers taking photos of
delivered parcels, which has helped to improve customer
satisfaction.
Evri has high client retention rates and solid contractual
features, and operates in a market with solid growth prospects.
Evri's retention of clients has been 98% by volumes over the past
five years and it has an average contract length of 3.4 years. The
vast majority of its contracts includes inflation pass-through
clauses and most of them also include minimum volume commitments.
Evri's customer concentration is moderate with its 10 top customers
contributing about 39% of its revenue and no significant reliance
on a single customer. U.K. parcel volumes grew by an average of
about 8% per year in 2018-2023 and we anticipate they will grow by
an average of 5%-7% per year in 2024-2029, mainly driven by further
growth in e-commerce penetration and a continued trend toward
higher-frequency, lower-value online purchases.
Evri's business risk profile is somewhat constrained by its
narrower business scope and smaller scale than rated postal peers.
Evri's operations are concentrated in the competitive U.K. B2C
parcels market, in which it has a No.3 position behind Royal Mail
and Amazon (the latter has a different model with a largely captive
market). Within this market Evri has a large exposure to
medium-size parcels for relatively low value items, including
fashion (clothing, footwear, eyewear, and accessories), which is
estimated to contribute about half of its volumes. By contrast,
Evri's rated postal peers IDS, PostNL, and bpost have a broader
business scope, including near-monopolistic mail operations (with
good profitability for PostNL and bpost), as well as parcels, and
IDS is more geographically diversified in the European parcels
market through its strong performing GLS segment, as well as Royal
Mail. Moreover, Evri's revenue of about GBP1.7 billion in fiscal
2024 was lower than IDS' revenue of GBP12.7 billion (out of which
GBP4.8 billion was U.K. parcels revenue), PostNL's (EUR3.2 billion,
including EUR2.3 billion for parcels) and bpost's (about EUR4.3
billion, including EUR0.5 billion for parcels).
Evri will have a highly leveraged financial risk profile following
the transaction. S&P said, "We forecast adjusted gross debt to
EBITDA of 5.3x-5.5x in fiscal 2025 and 5.0x-5.2x in fiscal 2026.
Our forecast reflects the GBP1.4 billion of new debt, about GBP350
million of lease liabilities, factoring balances of GBP80
million-GBP90 million, and our forecast adjusted EBITDA of GBP330
million-GBP340 million in fiscal 2025 and GBP350 million-GBP370
million in fiscal 2026. We note that there is no non-common equity
in the group structure, such as preference shares or shareholder
loans. Our forecast adjusted EBITDA improvement of 20%-25% in
fiscal 2025 reflects particularly strong growth in volumes from
international inbound clients and from U.K. small and midsize
entities (SMEs), as well as a return to modest volume growth from
large U.K. corporates. It also reflects cost-saving initiatives
(such as a pay reset for a portion of couriers) and increased
automation at hubs and depots. Our forecast of a further 5%-10%
adjusted EBITDA growth in fiscal 2026 reflects an assumed uptick in
large corporate volumes as the U.K. macroeconomic outlook improves
and a softening of international inbound growth. We also anticipate
that Evri will generate healthy adjusted free operating cash flow
(FOCF) to debt of 7%-9% in fiscal 2025 and fiscal 2026, underpinned
by relatively low capital expenditure (capex) to sales of 2%-3%,
and funds from operations (FFO) cash interest coverage of
2.3x-2.5x."
S&P said, "Evri's ownership by financial sponsor Apollo and highly
leveraged balance sheet leads us to assess Evri's financial policy
as aggressive--and we assess the influence of financial sponsor
ownership as FS-6. We understand that Apollo intends to maintain
leverage below the opening level, which we estimate at about 6.1x
on an S&P Global Ratings-adjusted basis based on the new capital
structure and adjusted EBITDA for the 12 months ended May 31, 2024,
or about 5.7x excluding exceptional costs. We anticipate that if
Apollo decides in the future to re-leverage the company to the
opening level, S&P Global Ratings-adjusted leverage will likely not
exceed our ratings downside threshold of 5.5x for a prolonged
period due to the company's robust deleveraging capacity from
e-commerce market growth and continued ability to win market
share.
"We apply a positive comparable rating analysis modifier to arrive
at a 'B+' rating. This reflects Evri's positioning at the stronger
end of its business and financial risk categories, thanks to its
above-average profitability and forecast adjusted leverage below
5.5x.
"The stable outlook reflects our expectation of significant EBITDA
growth in fiscal 2025 driven by strong growth in parcel volumes and
cost-saving initiatives.
"We could lower the rating if Evri's adjusted debt to EBITDA
remains above 5.5x due to operating underperformance or more
aggressive financial policy than expected. This could result from
an unexpected slowdown or decline in the U.K. parcels market, or
from significant debt-financed dividends, acquisitions, or capex.
We could also lower the rating if Evri were no longer able to
generate materially positive FOCF or its liquidity weakens.
"We view ratings upside as unlikely based on our assessment of
Evri's financial-sponsor owner's financial policy and track record.
Nevertheless, we could raise the rating if Evri were to commit to
de-leverage the business significantly, underpinned by a planned
exit of the financial sponsor. We could also improve our assessment
of Evri's business risk profile if it demonstrates sustainably
elevated levels of profitability and FOCF generation.
"Governance factors are a moderately negative consideration in our
credit rating analysis of Evri. Our assessment of the company's
financial risk profile as highly leveraged reflects corporate
decision-making that prioritizes the interests of the controlling
owners, in line with our view of the majority of rated entities
owned by private-equity sponsors. Our assessment also reflects
generally finite holding periods and a focus on maximizing
shareholder returns.
"Social factors have no material influence on our credit rating
analysis of Evri. Potential regulatory change around
self-employment models is a risk that could lead to higher costs,
but we anticipate that it would likely be manageable. Under Evri's
self-employed plus model, couriers already receive benefits that
self-employed workers typically don't receive, such as paid
holiday, a pension, parental leave, and hourly pay in excess of (or
at least no lower than) the national living wage. The model has
been endorsed by various stakeholders including the GMB Union, HM
Revenue and Customs, and the Pensions Regulator, and validated by
the 2023 Supreme Court judgement for Deliveroo, which ruled that
its couriers are not employees.
"Environmental factors have no material influence on our credit
rating analysis of Evri. The company has achieved a 22% reduction
in CO2 emissions per parcel per year since 2021 and aims to reach
net-zero direct and indirect emissions by 2035. Over the medium
term Evri aims to continue to grow its fleet of low-carbon trucks,
electric vans, and e-cargo bikes and to install charging
infrastructure and decarbonize suppliers."
ENQUEST PLC: S&P Rates New $160MM Unsec. Fixed-Rate Notes 'B+'
--------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue rating to EnQuest PLC
(B/Stable/--)'s proposed $160 million tap of its senior unsecured
fixed-rate notes maturing November 2027. S&P assigned a '2'
recovery rating to this proposed debt, indicating its expectation
of meaningful recovery prospects (70%-90%; rounded estimate: 85%)
in the event of a default. The recovery rating is capped at '2' in
line with its methodology, even though the reserve value
arithmetically points to a higher recovery.
EnQuest, a U.K.-based oil and gas exploration and production
company with operations in the North Sea and Malaysia, intends to
use the proceeds from the issuance to refinance its outstanding
$150 million subordinated term loan due July 2027. S&P considers
the transaction to be leverage neutral, with no impact on the 'B'
issuer credit rating.
Following the refinancing, the pro forma debt structure as of June
30, 2024, will comprise:
-- A $228.7 million fully undrawn available senior secured
reserve-based loan, due 2027;
-- $465.0 million of senior unsecured notes, comprising $305
million notes outstanding and the $160 million of proposed notes,
due 2027;
-- A $168.6 million retail bond, due 2027; and
-- $34.8 million Sullom Voe Terminal working capital facility, due
2027.
EUROSAIL-UK 2007-1NC: S&P Lowers Class D1a Notes Rating to 'B+'
---------------------------------------------------------------
S&P Global Ratings lowered to 'B+ (sf)' from 'BB (sf)' its credit
ratings on Eurosail-UK 2007-1NC PLC's class D1a and D1c. At the
same time, S&P affirmed its 'A+ (sf)' ratings on the class B1a,
B1c, and C1a notes, and its 'B- (sf)' rating on the class E1c
notes.
Since S&P's previous review, the transaction's performance has
deteriorated. Arrears, as per the June 2024 investor report, have
increased to 38.46% from 31.85%. The percentage increase in arrears
mostly reflects the reduced pool size rather than the actual
increase in arrears.
Cumulative losses have increased marginally to 5.68% from 5.66% at
S&P's previous review.
S&P said, "Our weighted-average foreclosure frequency assumptions
have increased at all rating levels, reflecting higher arrears.
This has been partially offset by lower weighted-average loss
severity assumptions, stemming from a decrease in the current
loan-to-value ratio following house price index growth. However,
considering the transaction's historical loss severity levels, the
latest available data suggests that the portfolio's underlying
properties may have only partially benefited from rising house
prices, and we have therefore applied a haircut to property
valuations to reflect this."
Weighted-average foreclosure frequency and weighted-average loss
severity
WAFF (%) WALS (%) CREDIT COVERAGE (%)
AAA 56.19 26.01 14.61
AA 52.56 19.17 10.08
A 50.27 9.90 4.98
BBB 47.77 6.01 2.87
BB 45.28 4.07 1.84
B 44.65 2.78 1.24
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
The reserve fund is at target and is not amortizing due to the
breach in the 90+ days arrears and cumulative losses triggers. The
liquidity facility is at target and covers interest shortfalls on
the notes. Given the sequential amortization, credit enhancement
has increased since S&P's previous review. This offsets the
deteriorating performance in its cash flow analysis.
Like other Eurosail transactions, both fixed and floating fees for
this deal have increased above their historical averages. These
elevated expenses are attributable to legal complexities arising
from the LIBOR transition. Consequently, S&P anticipates a decline
in fees moving forward and have incorporated various fee scenarios
into its cash flow analysis.
S&P said, "Our cash flow modelling shows that the class B1a, B1c,
and C1a notes pay timely interest and repay principal at rating
levels above 'A+'. However, our counterparty criteria cap the notes
at our 'A+' long-term issuer credit rating on Barclays Bank PLC. We
therefore affirmed our 'A+ (sf)' ratings on these notes.
"We lowered to 'B+ (sf)' from 'BB (sf)' our ratings on the class
D1a and D1c notes. The assigned ratings reflect our cash flow
results, and factor in sensitivity to increased arrears (resulting
in higher defaults and longer recoveries), the borrowers' credit
profile, high interest rate environment, and tail-end risk
associated with the small pool size.
"The class E1c notes do not achieve any rating in our standard or
steady state scenario (actual fees, expected prepayment, no spread
compression, and no commingling stress) cash flow runs. We do not
believe this tranche has sufficient credit enhancement to withstand
a mild stress. Given the current credit enhancement of around 4%,
the non-amortizing reserve fund, and the improving macroeconomic
environment for non-conforming borrowers due to declining interest
rates, we affirmed our 'B- (sf)' rating.
"We consider the transaction's resilience in case of additional
stresses to some key variables, in particular defaults and loss
severity, to determine our forward-looking view. We considered the
sensitivity of the ratings to increased defaults, extended
recoveries, and higher interest rates, and the ratings remain
robust. Given its high seasoning (214 months), the transaction has
a low pool factor (12.48%), which tends to amplify movement in
arrears. We have considered the tail-end risk associated with the
low pool factor in our analysis."
Macroeconomic forecasts and forward-looking analysis
S&P expects interest rates in the U.K. to remain higher for longer
than previously expected.
S&P said, "We consider the borrowers in this transaction to be
nonconforming and as such generally less resilient to higher
interest rates than prime borrowers. All the borrowers are
currently paying a floating rate of interest and will be affected
by higher rates. In our view, the ability of the borrowers to repay
their mortgage loans will be highly correlated to macroeconomic
conditions and the complex profile of nonconforming borrowers. Our
current forecast on policy interest rates for the U.K. is 4.5% in
2024, and we forecast unemployment of 4.3% for both 2024 and 2025.
"Given our current macroeconomic forecasts and forward-looking view
of the U.K. residential mortgage market, we have performed
additional sensitivities related to higher levels of defaults due
to increased arrears and house price declines. We have also
performed additional sensitivities with extended recovery timings
due to observed repossession delays owing to court backlogs in the
U.K. and the repossession grace period under the Mortgage Charter.
The results of the additional sensitivities were in line with the
ratings assigned."
The loan pool comprises first- and second-ranking mortgages on
properties in England, Wales, and Northern Ireland, and standard
securities on properties in Scotland. This transaction is backed by
nonconforming U.K. residential mortgages originated by Southern
Pacific Mortgage Ltd. and Preferred Mortgages Ltd. in February
2007.
FYLDE FUNDING 2024-1: S&P Assigns Prelim. B Rating on Class F Debt
------------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to Fylde
Funding 2024-1 PLC's class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd,
F-Dfrd, and X-Dfrd notes. At closing, Fylde Funding 2024-1 will
also issue unrated class Z notes, certificates, and a VRR loan
note.
This is an RMBS transaction originated by Tandem Home Loans (a
related arm of Tandem Bank Ltd.) that securitizes a provisional
portfolio of GBP290.3 million second-lien mortgage loans secured
over properties in the U.K. 4.2% of the loans in the pool are on
buy-to-let properties.
This is the first RMBS transaction originated by Tandem Home Loans
that we have rated. S&P previously rated Polo Funding 2021-1 PLC,
where Oplo HL Ltd. originated the collateral. Oplo Group merged
with Tandem Bank in 2022. This transaction's collateral differs
significantly from Polo Funding 2021-1 in terms of loan to value
and underwriting criteria.
The assets backing the notes are U.K. second-lien mortgage loans,
which are positively selected from the lender's book post the
strengthening of its lending criteria since 2020. All of the loans
in the pool were originated post April 2022.
The transaction benefits from liquidity provided by a liquidity
reserve fund (unfunded at closing), and principal can be used to
pay senior fees and interest on the notes subject to various
conditions.
Day 1 credit enhancement for the rated notes will consist of
subordination.
At closing, the issuer will use the issuance proceeds to purchase
the full beneficial interest in the mortgage loans from the seller.
The issuer grants security over all of its assets in the security
trustee's favor.
There are no rating constraints in the transaction under S&P's
counterparty, operational risk, or structured finance sovereign
risk criteria. S&P considers the issuer to be bankruptcy remote.
Tandem Home Loans is also the servicer in the transaction. S&P
reviewed Tandem Home Loans' servicing and default management
processes, and we believe it is capable of performing its
functions.
In S&P's analysis, it considered its current macroeconomic
forecasts and forward-looking view of the U.K. residential mortgage
market through additional cash flow sensitivities.
Preliminary ratings
CLASS PRELIM. RATING* CLASS SIZE (%)
A AAA (sf) 75.00
B AA (sf) 8.00
C-Dfrd A (sf) 5.00
D-Dfrd BBB (sf) 4.50
E-Dfrd BB (sf) 3.50
F-Dfrd B (sf) 2.50
X-Dfrd BB (sf) 2.00
Z NR 1.50
Certificates NR N/A
VRR Loan Note NR N/A
*S&P said, "Our ratings address timely receipt of interest and
ultimate repayment of principal on the class A and B notes, and the
ultimate payment of interest and principal on all other rated
notes. Our ratings also address timely interest on the rated notes
when they become most senior outstanding. Any deferred interest is
due immediately when the class becomes the most senior class
outstanding."
NR--Not rated.
N/A--Not applicable.
HODGKINSON BUILDERS: Opus Restructuring Named as Administrators
---------------------------------------------------------------
Hodgkinson Builders Limited was placed in administration
proceedings in the High Court of Justice, Court Number:
CR-2024-004860, and Louise Williams and Paul Mallatratt of Opus
Restructuring LLP were appointed as administrators on Aug. 28,
2024.
Hodgkinson Builders is involved in the construction of civil
engineering projects.
Its registered office is at 1 Radian Court, Knowlhill, Milton
Keynes, Buckinghamshire, MK5 8PJ.
The administrators can be reached at:
Louise Williams
Paul Mallatratt
Opus Restructuring LLP
Bridgford Business Centre
29 Bridgford Road, West Bridgford
Nottingham, NG2 6AU
For further information, contact:
The Joint Administrators
Tel No: 0115 666 8230
Alternative contact: Charlotte Jones
INEOS QUATTRO: S&P Gives 'BB' Rating on New Term Loan B Due 2031
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue rating to INEOS Quattro
Holdings UK Ltd.'s proposed term loan B (TLB) due in 2031. Together
with INEOS Quattro Finance 2 PLC's senior secured debt, the new
debt equivalent to EUR1.6 billion, in a combination of euro and
U.S. dollars, will be used to refinance the existing euro and U.S.
dollar TLB due in 2026, euro senior notes due in 2026, and to fund
a capped tender for the Styrolution euro-denominated senior secured
notes due in 2027. This does not affect its 'BB' long-term issuer
credit rating on Quattro with a negative outlook.
The transaction reflects Quattro's proactive maturity management.
It will be broadly credit neutral since the new debt will refinance
existing debt.
The loan documentation allows Quattro to incur additional debt,
subject to a minimum fixed charge coverage ratio of 2.0x. There is
also a restricted payment covenant, as well as limits on the sale
of certain assets and transactions with affiliates.
Recovery Analysis
Key analytical factors
The recovery rating reflects S&P'sr view of the group's substantial
asset base and its fairly comprehensive security and guarantee
package.
However, this is balanced by the absence of maintenance financial
covenants and a substantial proportion of the group's working
capital assets being pledged in favor of a receivables
securitization facility.
The security package for the senior secured facilities comprises
pledges over all assets, shares, and guarantors that collectively
represent at least 85% of EBITDA and assets.
S&P values Quattro as a going concern, given the group's solid
market position, large-scale integrated petrochemicals sites across
the U.S. and Europe, and diversified end markets.
Simulated default assumptions
-- Year of default: 2029.
-- Jurisdiction: U.K.
Simplified waterfall
-- Emergence EBITDA: About EUR0.9 billion.
-- Capex represents 2% of three-year annual average sales
(2021-2023).
-- Standard cyclicality adjustment of 10% for the commodity
chemicals industry.
-- Multiple: 5.5x.
-- Operational adjustment of +20% to reflect the company's large
scale, integrated, and cost-competitive asset base and expanded
perimeter following recent acquisitions.
-- Gross recovery value: EUR5.9 billion.
-- Net recovery value for waterfall after administrative expenses
(5%): EUR5.6 billion.
-- Estimated priority claims (mainly securitization program
outstanding): EUR0.5 billion.
-- Remaining recovery value: EUR5.1 billion.
-- Estimated first-lien debt claim: EUR7.4 billion.
--Recovery range: 50%-70% (rounded estimate: 65%).
--Recovery rating: 3.
*All debt amounts include six months of prepetition interest.
Securitization facility assumed 100% drawn at default.
ISG CENTRAL: Ernst & Young Named as Administrators
--------------------------------------------------
ISG Central Services Limited was placed in administration
proceedings in the High Court of Justice Business and Property
Courts of England and Wales, Insolvency & Companies List (ChD),
Court Number: CR-2024-005476, and Alan Hudson, Dan Edkins, and
Timothy Vance of Ernst & Young LLP were appointed as administrators
on Sept. 20, 2024.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG CONSTRUCTION: Ernst & Young Named as Administrators
-------------------------------------------------------
ISG Construction Limited was placed in administration proceedings
in the High Court of Justice Business and Property Courts of
England and Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005477, and Alan Hudson, Dan Edkins, and Timothy Vance of
Ernst & Young LLP were appointed as administrators on Sept. 20,
2024.
ISG Construction engages in the construction of commercial
buildings.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG ENGINEERING: Ernst & Young Named as Administrators
------------------------------------------------------
ISG Engineering Services Limited was placed in administration
proceedings in the High Court of Justice Business and Property
Courts of England and Wales, Insolvency & Companies List (ChD),
Court Number: CR-2024-005479, and Alan Hudson, Dan Edkins, and
Timothy Vance of Ernst & Young LLP were appointed as administrators
on Sept. 20, 2024.
ISG Engineering engages in the construction of civil engineering
projects.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG FIT: Ernst & Young Named as Administrators
----------------------------------------------
ISG Fit Out Limited was placed in administration proceedings in the
High Court of Justice Business and Property Courts of England and
Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005472, and Alan Hudson, Dan Edkins, and Timothy Vance of
Ernst & Young LLP were appointed as administrators on Sept. 20,
2024.
ISG Fit Out engages in the construction of commercial buildings.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place
London SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG INTERIOR: Ernst & Young Named as Administrators
---------------------------------------------------
ISG Interior Services Group UK LIMITED was placed in administration
proceedings in the High Court of Justice Business and Property
Courts of England and Wales, Insolvency & Companies List (ChD),
Court Number: CR-2024-005474, and Alan Hudson, Dan Edkins, and
Timothy Vance of Ernst & Young LLP were appointed as administrators
on Sept. 20, 2024.
ISG Interior engages in construction activities.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG JACKSON: Ernst & Young Named as Administrators
--------------------------------------------------
ISG Jackson Limited was placed into administration proceedings in
the High Court of Justice Business and Property Courts of England
and Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005478, and Alan Hudson, Dan Edkins, and Timothy Vance of
Ernst & Young LLP, were appointed as administrators on Sept 20,
2024.
ISG Jackson engages in the construction of commercial buildings.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG RETAIL: Ernst & Young Named as Administrators
-------------------------------------------------
ISG Retail Limited was placed in administration proceedings in the
High Court of Justice Business and Property Courts of England and
Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005480, and Alan Hudson, Dan Edkins, and Timothy Vance of
Ernst & Young LLP were appointed as administrators on Sept. 20,
2024.
ISG Engineering engages in the construction of civil engineering
projects.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
ISG UK: Ernst & Young Named as Administrators
---------------------------------------------
ISG UK Retail Limited was placed in administration proceedings in
the High Court of Justice Business and Property Courts of England
and Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005475, and Alan Hudson, Dan Edkins, and Timothy Vance of
Ernst & Young LLP were appointed as administrators on Sept. 20,
2024.
ISG UK Retail engages in the construction of commercial buildings.
Its registered office and principal trading address is at Aldgate
House, 33 Aldgate High Street, London, EC3N 1AG.
The administrators can be reached at:
Alan Hudson
Dan Edkins
Ernst & Young LLP
1 More London Place, London
SE1 2AF
-- and --
Timothy Vance
Ernst & Young LLP
12 Wellington Place
Leeds, LS1 4AP
For further information, contact:
The Joint Administrators
Email: tvance@parthenon.ey.com
Alternative contact: Catriona Lynch
KINGSWAY SQUARE: Cowgills Limited Named as Joint Administrators
---------------------------------------------------------------
Kingsway Square Limited was placed in administration proceedings in
the High Court of Justice Business and Property Courts in
Manchester, Insolvency & Companies List (ChD), Court Number: No
001076 of 2024, and James Fish and Craig Johns of Cowgills Limited
were appointed as administrators on Sept. 13, 2024.
Kingsway Square Limited is involved in the development of building
projects, buying and selling of own real estate.
Its registered office is at Sourced Unit 5 Turnstone Business Park,
Mulberry Avenue, Widnes, WA8 0WN.
The joint administrators can be reached at:
James Fish
Craig Johns
Cowgills Limited
Fourth Floor Unit 5B
The Parklands, Bolton
BL6 4SD
Tel. No: 0161 827 1200.
For further information, contact:
The Joint Administrators
Tel No: 0114 235 6780
Alternative contact:
Hannah Brown
Cowgills Limited
Fourth Floor Unit 5B
The Parklands
Bolton BL6 4SD
Email: hannah.brown@cowgills.co.uk
Tel No: 0161-827-1217
LERNEN BIDCO: Fitch Hikes LongTerm IDR to 'B', Outlook Stable
-------------------------------------------------------------
Fitch Ratings has upgraded Lernen Bidco Limited's (Cognita)
Long-Term Issuer Default Rating (IDR) to 'B' from 'B-'. The Outlook
is Stable.
Fitch has also upgraded the company's aggregate EUR1,260 million
term loan facilities (TLBs) to 'B' from 'B-', with an unchanged
'RR4' Recovery Rating. Fitch has also assigned a 'B' instrument
rating to Lernen US Finco LLC's new USD450 million TLBs with a
'RR4' Recovery Rating.
The upgrade of Cognita's IDR reflects Fitch's forecast that EBITDAR
gross leverage will improve towards 7.0x by the financial year to
August 2025 (FY25); and Fitch expects it to remain structurally
below 7.0x thereafter. EBITDAR interest coverage is likely to reach
1.8x first in FY26, but Fitch forecasts structurally positive free
cash flow (FCF) from FY25. The company has improved its liquidity
and financial flexibility with new debt and equity, and Fitch
believes there is greater clarity of the debt/equity mix of growth
in the next couple of years.
The Stable Outlook reflects Fitch's expectations of improving
interest coverage and FCF, and leverage to remain within its
sensitivities for the 'B' rating, supported by disciplined M&A
spending and funding.
Key Rating Drivers
Financial Metrics at 'B': Fitch forecasts Cognita's EBITDAR gross
leverage and EBITDAR fixed-charge coverage at 7.0x and 1.6x,
respectively, in FYE25. Fitch forecasts strong deleveraging in the
underlying business, on student number growth and tuition fee
increases above wage inflation, but also from its partnerships in
the Middle East and recent acquisitions (Four-Forest and Al Ain)
fully contributing from FY25. All this should reduce EBITDAR gross
leverage to 7.0x by FYE25 and 6.5x by FYE26.
Fitch expects EBITDAR fixed-charge coverage to remain around 1.6x
in FY25 due to higher overall capital-market rates, but to improve
towards 1.8x in FY26, concurrently with higher absolute EBITDA (and
FCF staying positive on a sustained basis from FY25).
Improved Liquidity, Adequate Growth Funding: The additional TLB
will be used together with GBP150 million of new equity to repay
current outstanding revolving credit facility (RCF) drawings
(GBP129 million) and fund scheduled earn-outs in FY25 of about
GBP170 million (Latin America and Middle East; final FX rate
pending). This leaves about GBP200 million of cash to fund
additional M&A in FY25-FY27, in addition to a cleaned-down and
upsized GBP300 million RCF.
Fitch includes about GBP150 million of M&A consideration per year
in FY25-FY27 (aggregate GBP450 million of M&A) with about GBP200
million of RCF drawings spread across FY26 and FY27 to part-fund
M&A, leaving GBP100 million of undrawn RCF in FYE27.
Resilient Growth, Improving Margin Mix: Its rating case includes
revenue growth of around 17% in FY24 and 15% in FY25 (including EKI
in FY23, but also Dasman, Four-Forest and Al Ain in FY24, and
GBP150 million of additional M&A in FY25). In addition to increased
students (acquired and enrolled), fee increases will lift average
revenue per pupil by 3% and 4% in FY24 and FY25, respectively,
(including M&A in the Middle East but also reduced prices in Asia
in FY24).
Fitch forecasts the Fitch-defined EBITDA margin to rise to around
20% in FY24 and 21.7% in FY25, from 17.3% in FY23 as a favourable
mix-shift effect from FY23 and FY24 acquisitions in the Middle East
offset reduced prices in Asia and remaining pressures in Europe.
Middle East Second-Largest Contributor: Cognita enhanced its
presence in the Middle East with large acquisitions in FY23 and
FY24: EKI in Dubai, Dasman in Kuwait and recently Al Ain in the
UAE. Fitch expects the region to contribute 25% of group EBITDA
(before central costs) in FY25, making it the second-largest region
by EBITDA contribution after Asia but before Latin America and
Europe.
Dubai operations are typically expatriate concentrated, with lower
revenue visibility than local-oriented schools, but the average
stay is long (kindergarten to 12th grade; K-12), and the
partnership diversifies Cognita's global EBITDA and enhances its
EBITDA margin. Fitch expects significant growth (about 22% student
CAGR) and margin expansion (about 30% EBITDA margin before central
costs, from around 18%) from the Middle East in FY23-FY26.
Capex and M&A Drive Growth: Fitch expects Cognita to continue to
invest in growth through development capex and bolt-on
acquisitions. Its rating case includes development capex of around
GBP170 million across FY24-FY26, with FCF turning positive in FY25.
Investments in new capacity weigh on FCF but, given likely student
enrolment, profits will grow after capex is incurred.
Fitch includes around GBP170 million of earn-out payments in FY25
for already incurred acquisitions, predominantly for Dunalastair in
Chile but also EKI in the Middle East.
Revenue Predictability, High Retention Rates: The private-pay K-12
market has strong revenue visibility with long average student
stay, typically eight to 10 years for local students and four to
six years for expat students. Switching costs once a child is
settled are high, and tuition fees are a non-discretionary expense
for parents, as demonstrated by Cognita's above-inflation price
increases and resilient enrolment across the economic cycle.
Cognita's student retention rate is around 80% including
graduation, and is supported by more than 90% local students in
Europe (UK-weighted) and Latin America (together around 40% of
EBITDA before central costs in FYE24).
Some Execution Risks Persist: Fitch sees inherent execution risks
from recently established or newly built schools as they only
gradually fill capacity. This is partly mitigated by the high
visibility of the competitive environment with long lead times (and
therefore a predictable fill of newly completed capacity), use of
strong brands, and reputation, including academic record and
parental scoring.
Execution risk from M&A is predominantly for larger acquisitions,
like the partnership with EKI in Dubai and entry into Kuwait), plus
and Al Ain in the UAE. However, this is partly mitigated by
Cognita's focus on profitable targets and record of due diligence
and integration. The rating case incorporates a prudent M&A and
investment policy.
Top Schools Dominate, Type Varies: Top 10 school clusters (18
individual schools) represented around 41% of Cognita's revenue and
around 65% of EBITDA before central costs in FY23. Exposure to
expat, often premium (versus local, mid-market) students is greater
in the Asian portfolio (51% of total enrolled students, but a
larger share of EBITDA), whereas the higher volume, lower-fee Latin
American portfolio focuses on local students.
The European portfolio (UK and Spain weighted) consists of
smaller-capacity schools, fewer students, and higher average
revenue per pupil, whereas those in the Asian portfolio are much
larger. In FY24, the newly acquired schools in the Middle East, EKI
and Dasman, have become part of the top 10 school clusters.
Derivation Summary
Cognita benefits from a diverse portfolio in geography, expatriate-
and local-student intake, curriculums and price points compared
with private, for-profit education providers in the 'B' rating
category globally. The global private education sector continues to
grow, and annual fee increases tend to be at or above inflation.
GEMS Menasa (Cayman) Limited is Dubai concentrated, but its K-12
portfolio covers different price points - premium to mid-market -
and curriculums. Both GEMS and Cognita have long-dated revenue
taken from their average student stay.
Global University Systems Holding B.V. (GUSH; B/Stable) has wider
breadth than Cognita and GEMS' K-12 schools. However, it offers
shorter education, typically of three to four years (longer for
part-time), whereas retention will be higher for primary and
secondary schools. As GUSH has expanded, its reliance on
international student enrolments has grown.
GEMS has larger scale and stronger profitability than Cognita, but
this is counterbalanced by Cognita's diversified operations by
geography and regulatory end-markets, as opposed to Dubai-centered
GEMS.
Key Assumptions
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Revenue growth of around 16.7% in FY24, 15% in FY25 and 11% in
FY26 (including organic and M&A)
- Student growth of 13.4% in FY24 and around 7% in FY25 (both
including closed M&A) and 3% in FY26 (excluding M&A)
- Average revenue per pupil increasing around 3% in FY25 and around
4% in FY26
- Fitch-defined EBITDA margin increasing to 20% in FY24 and 21.6%
in FY25 through a mixed effect from recent acquisitions but also
higher utilisation rates and improved staff efficiency
- Cash-based leases increasing to around GBP64 million in FY25 (due
to expansion and CPI-linked rent contracts)
- Working-capital inflow of around 2% of revenue a year to FY26
(excluding a GBP29 million one-off impact in FY24/FY25)
- Capex (maintenance and expansion) of GBP90 million-100 million a
year across FY24-FY26
- Structurally positive FCF in FY25 and FY26 (after expansion
capex)
- Scheduled deferred acquisition consideration of GBP170 million in
FY25-FY26
- Assumed GBP150 million of M&A consideration in FY25 and FY26.
- GBP150 million of new equity in September FY25 and around GBP200
million of RCF drawings in FY26 and FY27. (For any additional
acquisitions, Fitch expects a prudent debt/equity funding mix
without re-leveraging.)
- Fitch views leases as a core financing decision for Cognita under
its property-based services, unlike other service providers, and
therefore use lease-adjusted metrics in assessing Cognita's
financial risk profile
Recovery Analysis
Its recovery analysis assumes that Cognita would be reorganised as
a going concern (GC) in bankruptcy rather than liquidated. Fitch
has assumed a 10% administrative claim. The GC EBITDA of GBP171
million (including recent acquisition) reflects stress assumptions
that may be driven by weaker operating performance and an inability
to increase students and pricing according to plan with lower
overall utilisation rates, adverse regulatory changes or weaker
economic growth in key markets with reduced pricing power.
Fitch has applied an enterprise value (EV) multiple of 6.0x to the
GC EBITDA to calculate a post re-organisation EV. The choice of
this multiple is based on well-invested operations, strong growth
prospects with medium- to-long term revenue visibility and
diversified global operations, but is constrained by weaker
profitability than peers'. The multiple is in line with Fitch-rated
wider education sector peers'.
Fitch assumes Cognita's GBP300 million RCF to be fully drawn on
default, ranking equally with its aggregate EUR1,260 million and
USD450 million senior secured TLBs. Fitch treats local
prior-ranking debt as super-senior in its debt waterfall.
Based on current metrics and assumptions, its analysis generates a
ranked recovery at 38% in the 'RR4' band for the senior secured
debt. This indicates a 'B' instrument rating for the TLBs, aligned
with the IDR.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Upgrade
- Successful execution of growth strategy with improved scale of
operations, including profitability and FCF generation
- EBITDAR leverage structurally below 5.0x, including clarity on
capital allocation from management that would keep leverage
structurally below this level
- EBITDAR fixed charge coverage sustained above 2.5x
- Consistently positive mid-single-digit FCF margin
Factors that Could, Individually or Collectively, Lead to a
Downgrade
- Inability to increase students and pricing according to plan with
lower overall utilisation rates, adverse regulatory changes or a
general economic decline with lower revenue growth
- EBITDAR leverage remaining structurally above 7.0x, owing to
operational underperformance or an appetite for debt-funded
acquisitions
- EBITDAR fixed charge coverage remaining structurally below 1.8x
- Neutral to negative FCF (post-expansion capex and scheduled
earn-outs) with reduced liquidity headroom
Liquidity and Debt Structure
Satisfactory Liquidity: Cognita's Fitch-adjusted cash position was
GBP110 million at FYE23, and Fitch estimates it at GBP106 million
in FY24. Fitch forecasts negative FCF (after expansion capex and
scheduled deferred payments) of about GBP150 million in FY25. This
is sufficiently covered by a new USD450 million TLB and GBP150
million of new equity. After clean-down of the RCF, there will be
about GBP200 million of cash and a GBP300 million un-drawn RCF
available. Fitch includes about GBP150 million of acquisitions a
year in FY25-FY27.
Fitch restricts GBP50 million of cash for some overseas accounts.
Although available for investments and projects locally, Fitch
believes they are not readily available for debt service at the
issuer level.
Manageable Refinancing Risk: Refinancing risk is partly mitigated
by Cognita's deleveraging capacity, a resilient business profile
and positive underlying cash flow generation. Its RCF and EUR TLBs
mature in October 2028 and April 2029, respectively, the new US TLB
thereafter. Absent material debt-funded acquisitions, and given
continued deleveraging and improved debt service metrics,
refinancing risk should be manageable.
Issuer Profile
Cognita is a global private-pay, for-profit, K-12 educational
services group that operates schools across Asia, Europe, the
Americas and the Middle East.
Criteria Variation
Fitch's Corporate Rating Criteria guide analysts to use the income
statement rent charge (depreciation of leased assets plus interest
on leased liabilities) as the basis of its rent-multiple adjustment
(capitalising to create a debt-equivalent) in lease-adjusted
ratios. However, Cognita's accounting rent (GBP69.4 million in its
FY23 income statement) is significantly higher than the cash flow
rent paid each year, so Fitch has applied an 8x debt multiple to
the annual cash rent (GBP46.9 million).
There may be various reasons for the difference in accounting rent
versus cash-paid rent. Cognita has prepaid some rents, and its
long-dated real estate leases (some more than 20 years) result in
higher non-cash, straight-lined, "depreciation" within accounting
rent. In some other Fitch-rated leveraged finance portfolio
examples, the difference between accounting and cash rents is not
of the magnitude to justify this switch to cash rents.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
Lernen Bidco Limited LT IDR B Upgrade B-
senior secured LT B Upgrade RR4 B-
Lernen US Finco LLC
senior secured LT B New Rating RR4
MIDLOTHIAN UTILITIES: Interpath Ltd Named as Joint Administrators
-----------------------------------------------------------------
Midlothian Utilities Limited was placed in administration
proceedings in the Court Session, Court Number: No P863 of 24, and
Alistair McAlinden and James Alexander Dewar of Interpath Ltd were
appointed as joint administrators on Sept. 20, 2024.
Midlothian Utilities is a ground works and haulage contractor.
Its registered office is at c/o Interpath Ltd, 31 Charlotte Square,
Edinburgh, EH2 4ET. Its principal trading address is at 10 Guildie
Howes Rd, North Middleton, Gorebridge, EH23 4QR.
The administrators can be reached at:
Alistair McAlinden
James Alexander Dewar
c/o Interpath Ltd
31 Charlotte Square
Edinburgh, EH2 4ET
For further information, contact:
Shermin Efendi
Email: Shermin.Efendi@interpath.com
Tel No: 0141-648-4351
PSP ALUMINIUM: Interpath Advisory Named as Administrators
---------------------------------------------------------
PSP Aluminium Ltd was placed in administration proceedings in the
High Court of Justice Business and Property Courts in Leeds,
Insolvency & Companies List (ChD), Court Number:
CR-2024-LDS-000904, and James Ronald Alexander Lumb and James
Richard Clark of Interpath Advisory were appointed as
administrators on Sept. 20, 2024.
PSP Aluminium, trading as PSP Group, manufactures doors and windows
of metal.
Its registered office is at c/o Interpath Advisory, 60 Grey Street,
Newcastle, NE1 6AH. Its principal trading address is Unit 11, All
Saints Industrial Estate, Shildon, Co Durham, DL4 2RD.
The administrators can be reached at:
James Ronald Alexander Lumb
Interpath Advisory
60 Grey Street, Newcastle
NE1 6AH
-- and --
James Richard Clark
Interpath Advisory, 4th Floor
Tailors Corner, Thirsk Row
Leeds
LS1 4DP
For further information, contact:
Martyna Trzaska
Email: psparchitectural@interpath.com
PSP ARCHITECTURAL: Interpath Advisory Named as Administrators
-------------------------------------------------------------
PSP Architectural Ltd was placed in administration proceedings in
the High Court of Justice Business and Property Courts in Leeds,
Insolvency & Companies List (ChD), Court Number:
CR-2024-LDS-000902, and James Ronald Alexander Lumb and James
Richard Clark of Interpath Advisory were appointed as
administrators on Sept. 20, 2024.
PSP Architectural provides complete design, manufacture and supply
for bespoke envelope solutions including rainscreen cladding,
specialist fabrications, rainwater goods, ventilation, solar
shading, flashings, pressings and support façade systems.
Its registered office is at c/o Interpath Advisory, 60 Grey Street,
Newcastle, NE1 6AH. Its principal trading address is Unit 11, All
Saints Industrial Estate, Shildon, Co Durham, DL4 2RD.
The administrators can be reached at:
James Ronald Alexander Lumb
Interpath Advisory
60 Grey Street, Newcastle
NE1 6AH
-- and --
James Richard Clark
Interpath Advisory, 4th Floor
Tailors Corner, Thirsk Row
Leeds
LS1 4DP
For further information, contact:
Martyna Trzaska
Email: psparchitectural@interpath.com
SOMERS TOWN: Buchler Phillips Named as Administrators
-----------------------------------------------------
Somers Town Limited was placed in administration proceedings in the
High Court of Justice Business and Property Courts of England and
Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005511, and David Buchler and Joanne Milner of Buchler
Phillips Limited were appointed as administrators on Sept 23, 2024.
Somers Town operates a live music and hospitality venue.
Its registered office is at 49 Southwark Street, London, SE1 1RU.
Its principal trading address is at Unit 4, 4 Pancras Square, Kings
Cross, London N1C.
The administrators can be reached at:
David Buchler
Joanne Milner
Buchler Phillips Limited
64 North Row, Mayfair
London, W1K 7DA
Contact information for Administrators: David@buchlerphillips.com
Alternative contact: Runita Kholia
SOS COMMUNICATIONS: BDO LLP Named as Administrators
---------------------------------------------------
SOS Communications Ltd was placed in administration proceedings in
the High Court of Justice Business and Property Courts in
Manchester, Court Number: CR-2024-MAN-001185, and Kerry Bailey and
Mark Thornton of BDO LLP were appointed as administrators on Sept.
18, 2024.
SOS Communications engages in telecommunications activities.
Its registered office is at Phoenix Park Industrial Estate, Park
Street, Heywood, OL10 2AB to be changed to c/o BDO LLP, 5 Temple
Square, Temple Street, Liverpool, L2 5RH. Its principal trading
address is at Phoenix Park Industrial Estate, Park Street, Heywood,
OL10 2AB.
The joint administrators can be reached at:
Kerry Bailey
BDO LLP
Eden Building
Irwell Street
Salford M3 5EN
-- and --
Mark Thornton
BDO LLP
Central Square
29 Wellington Street
Leeds
LS1 4DL
For further information, contact:
Alex Convery
Tel No: +44(0)-744-2798412
Alternative contact: BRCMTNorthandScotland@bdo.co.uk
TALKTALK TELECOM: Fitch Lowers LongTerm IDR to 'RD'
---------------------------------------------------
Fitch Ratings has downgraded TalkTalk Telecom Group Limited's (TTG)
Long-Term Issuer Default Rating (IDR) to 'Restricted Default' (RD)
from 'C'. Fitch also affirmed TTG's secured debt rating at 'C' with
a Recovery Rating of 'RR4'.
The downgrade follows TTG's missed interest payment on September
16, after its applicable grace period, on its drawn USD330 million
revolving credit facility (RCF) maturing in November 2024. As
previously agreed with lenders as part of the lock-up agreement,
interest payments on the RCF will be capitalised and not paid in
cash until the successful completion of its Distressed Debt
Exchange (DDE). This constitutes a selective payment default on a
specific class of debt (RCF), according to its original terms, thus
triggering a downgrade to 'RD' under Fitch's criteria.
The 'RD' rating indicates that TTG has experienced a payment
default but has not entered into bankruptcy filings or similar
process, as it continues to operate under the terms established in
the lock-up agreement pending DDE completion.
TTG's DDE anticipated to close in November 2024 will prompt Fitch
to reassess the rating based on the revised capital structure,
future business prospects and liquidity position.
Key Rating Drivers
Default, Missed Interest Payment: TTG has not fulfilled the
interest payment on its RCF due in September 2024. The interest
payment will be capitalised according to the terms of the lock-up
agreement. Fitch believes TTG has received consent from 100% of its
lenders, giving it the choice to pay such interest in cash or
pay-in-kind (PIK) until the completion of the DDE. Fitch treats an
uncured payment default as a 'RD' until the DDE is completed,
provided TTG is still operating and is not pursuing a bankruptcy or
other formal winding-up procedure.
The remaining key rating drivers are as per its Rating Action
Commentary published on 18 September 2024.
Exchange Offer, DDE: TTG announced an exchange offer on its
outstanding debt to be executed via a consent solicitation process
on September 16, 2024, meeting the conditions for a DDE as per
Fitch's corporates rating criteria. At present, 100% of RCF
creditors and 97% of bondholders have agreed to TTG's debt
restructuring proposal. Fitch continues to evaluate TTG on its
existing capital structure, but including GBP235 million of new
senior secured debt incurred during August and September 2024.
Under the offer, TTG's GBP685 million senior secured notes (due
February 2025) and GBP330 million RCF will be exchanged for GBP650
million cash-pay first-lien (1L) term loan or notes due September
2027 and up to GBP386 million PIK second-lien (2L) term loan or
notes due March 2028, including accrued interest and fees. Debt
holders will receive a 25bp consent fee. TTG's GBP65 million cash
management facility will also be fully converted into equity and
its GBP170 million bridge facility will be refinanced into a PIK
"new money facility" of up to GBP181 million.
Material Reduction of Terms: Fitch views the transaction as a DDE.
The extension of maturities, conversion of a portion of interest
payments to PIK and weakening of claim priority on a significant
portion of debt, which will be converted to 2L, meet the condition
of a material reduction of terms. Fitch also believes the
amendments indicate a coercive element as they materially impair
the position of non-participating lenders. Non-consenting creditors
will suffer a 200bp haircut.
Avoidance of a Probable Default: Fitch believes TTG's weak
operating performance, untenable liquidity profile and
unsustainable leverage left the company unable to repay or
refinance its RCF or notes at par. There was a high probability of
default absent the exchange offer. TTG has been trying to secure
external funding since early 2024. However, this process did not
successfully complete within the timeframe necessary to allow for
an orderly refinancing, leaving no other option other than to
engage with existing lenders in a debt restructuring.
Headroom, But Uncertainty Remains: The debt restructuring will
address TTG's immediate refinancing needs, by reducing liquidity
pressures and allowing some cash flow headroom, with maturities
extended to 2027 at the earliest and cash interest costs reduced.
However, aside from working-capital pressures, TTG still needs to
invest capex in its network, incur copper-to-fibre transition
costs, and invest in operating efficiencies to optimise the
business over the next couple of years. Fitch also sees uncertainty
on the execution of TTG's refreshed strategies for PlatformX
Communication and TalkTalk Consumer.
Funding Flexibility: TTG has been managing its supplier
arrangements to retain liquidity in the business. Tangible
shareholder support is underlined in new funding of GBP235 million
being injected into the credit group, currently on a senior secured
basis. The funding will be used to reduce a large negative working
capital position in financial year ending February 2025 and cover
transaction fees totalling up to GBP240 million.
Weak Liquidity: Fitch believes liquidity will remain weak,
particularly once the GBP60 million shareholder facility is removed
from November 2024, predicated on TTG's ability to organically
generate positive free cash flow (FCF), with no further committed
facilities available to draw down. TTG has the option to capitalise
a material portion of 1L interest payments for a year starting from
November 2024 to provide some temporary relief, but refinancing
risks will remain high post-DDE with significant interest expected
to be capitalised across the debt structure.
Derivation Summary
Fitch believes TTG has a weak credit profile due to its high
leverage, weak liquidity and the need for enhanced discretionary
cash flow to effectively manage its balance sheet. TTG benefits
from a meaningful broadband customer base, and the company's
positioning in the value-for-money segment within a competitive
market structure.
TTG's operating and FCF margins are tangibly below the telecoms'
sector average, largely reflecting its limited scale, unbundled
local exchange network architecture, adaptability to the prevailing
macroeconomic conditions and dependence on regulated wholesale
products for 'last-mile' connectivity.
Peers such as BT Group plc (BBB/Stable) and VMED O2 UK Limited
(BB-/Negative) benefit from fully owned access infrastructure,
revenue diversification as a result of scale in multiple products
segments (such as mobile and pay-TV) and materially higher
operating and cash flow margins. Fitch considers cash flow
visibility at these peers greater, and, therefore, supportive of
higher relative leverage (ie supportive of higher leverage if the
ratings were aligned).
Key Assumptions
- Revenue decline of 1% in FY25 and CAGR of 1.7% in FY25-FY27, due
to inflation-linked price increases, growth in the Ethernet
business and transition to full-fibre products being offset by
competitive market dynamics and loss of revenues from TalkTalk
Business
- Gross margin of around 50% in FY25-FY27, as higher wholesale
costs on fibre-to-the-cabinet and FttP are mitigated by increasing
altnet mix
- Fitch-defined EBITDA margin of about 6% in FY25, gradually
increasing to about 9% in FY27, as operating expenses, including
subscriber-acquisition costs, gradually reduce in addition to
revenue growth
- IFRS16 lease cost-adjusted for one-off customer connection costs
treated as capex. Its analysis assumes GBP46 million of the IFRS16
lease cost relates to customer connection costs in FY24
- Total copper-to-fibre costs of GBP42 million in FY25, GBP30
million in FY26 and GBP15 million in FY27. A portion of
copper-to-fibre migration costs is treated as recurring and
included in Fitch-defined EBITDA
- Working capital-to-sales ratio of 1.5% in FY24, supported by
better working-capital terms, offset by deferred subscriber
acquisition cash outflows
- Capex-to-sales ratio of 6% in FY25, before falling towards 4.5%
by FY27. This reflects near-term investment in the transition to
fibre and improving capex intensity followed by normalisation as
the programme matures
- Network monetisation income treated above FCF but excluded from
Fitch-defined EBITDA
- Cash outflows of GBP35 million per year classified as intragroup
costs are treated above FCF
- No dividends in FY25-FY27 and use of the PIK toggle is assumed
Recovery Analysis
The recovery analysis assumes that TTG would be considered a going
concern (GC) in bankruptcy and that it would be reorganised rather
than liquidated, or following a traded asset valuation basis.
Post-restructuring, TTG may be acquired by a larger company that
will absorb its valuable customer base, exit certain business lines
or cut back its presence in certain less favourable service lines,
in turn reducing scale.
Fitch estimates that post-restructuring EBITDA for TTG would be
about GBP110 million. This includes Fitch's estimated pro-forma
EBITDA benefit of the Shell, OVO and Virtual1 customer bases now
incorporated into TTG, as well as reduced subscriber acquisition
costs. An enterprise value (EV) multiple of 4.0x is applied to the
GC EBITDA to calculate a post-reorganisation EV of GBP396 million
after deducting 10% for administrative claims related to bankruptcy
and associated costs. The multiple reflects TTG's smaller scale and
diversification and limited network ownership compared with peers
in developed markets.
Fitch assumes the GBP330 million RCF is fully drawn and is treated
equally with the GBP685 million senior secured bond and GBP235
million of new senior secured debt comprising a GBP65 million cash
management facility and GBP170 million bridge facility. Fitch
assumes the accounts receivables securitisation facility will
remain in place in a bankruptcy, and hence not affect recoveries
for secured creditors.
Its waterfall analysis generates a ranked recovery for senior
secured creditors in the 'RR4' band, indicating a 'C' senior
secured instrument rating. The waterfall analysis output percentage
on current metrics and assumptions is 32%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Fitch will reassess the IDR on successful completion of a DDE and
the updated IDR would reflect the post-debt restructuring capital
structure and credit profile
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- The IDR could be downgraded to 'D' in the absence of successful
completion of the lock-up agreement with lenders and bondholders,
leading to bankruptcy filings or other formal insolvency
procedures
Liquidity and Debt Structure
Minimal Headroom: The addition of GBP235 million of new debt will
primarily cover cash outflows associated with working capital and
transaction fees, expected to be at GBP230 million-GBP240 million
in total. Fitch expects the RCF to remain substantially drawn,
helped by a shareholder loan of GBP60 million to support near-term
cash needs, although this facility matures in November 2024.
The RCF matures in November 2024, while the senior secured notes
are due in February 2025 although, under the current arrangement,
these debt instruments would be exchanged for a GBP650 million
cash-pay 1L term loan or notes due September 2027 and up to GBP386
million PIK 2L term loan or notes due March 2028. The cash
management and bridge facilities are planned to be restructured
into equity and 2L debt, respectively, on completion of the
proposed amend-and-extend transaction.
Issuer Profile
TTG is an alternative 'value-for-money' fixed line telecom operator
in the UK, offering quad-play services to consumers and broadband
and ethernet services to business customers.
Summary of Financial Adjustments
Customer connection costs are classified by TTG as right-of-use
assets and depreciated under IFRS16 but are paid upfront as part of
capex. Therefore, TTG's lease cash repayments are lower than
depreciation of right-of-use assets plus interest on lease
liabilities (IFRS16 lease costs). According to Fitch's criteria,
IFRS16 lease costs should be deducted from operating profit in
calculating Fitch-defined EBITDA for this sector. Fitch has treated
the customer connection element of lease costs as capex and lowered
FY22 and FY23 IFRS16 lease costs by an assumed GBP22 million and
GBP42 million, respectively, for the portion of lease costs, which
relate to one-off customer connection costs.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
TalkTalk Telecom
Group Limited LT IDR RD Downgrade C
senior secured LT C Affirmed RR4 C
TRUST DISTRIBUTION: BDO LLP Named as Joint Administrators
---------------------------------------------------------
Trust Distribution Ltd was placed in administration proceedings in
the High Court of Justice Business and Property Courts in
Manchester, Court Number: CR-2024-MAN-001186, and Kerry Bailey and
Mark Thornton of BDO LLP were appointed as administrators on Sept
18, 2024.
Trust Distribution is a wholesaler of office machinery &
equipment.
Its registered office is at Phoenix Park Industrial Estate, Park
Street, Heywood, OL10 2AB to be changed to C/O BDO LLP, 5 Temple
Square, Temple Street, Liverpool, L2 5RH. Its principal trading
address is at Phoenix Park Industrial Estate, Park Street, Heywood,
OL10 2AB.
The joint administrators can be reached at:
Kerry Bailey
BDO LLP, Eden Building
Irwell Street, Salford
M3 5EN
-- and --
Mark Thornton
BDO LLP, Central Square
29 Wellington Street, Leeds
LS1 4DL
For further information, contact:
Alex Convery
Tel No: +44 (0) 744 2798412
Alternative contact: BRCMTNorthandScotland@bdo.co.uk
===============
X X X X X X X X
===============
[*] BOND PRICING: For the Week September 23 to September 27, 2024
-----------------------------------------------------------------
Issuer Coupon Maturity Currency Price
------ ------ -------- -------- -----
Altice France Hold 10.500 5/15/2027 USD 34.780
NCO Invest SA 10.000 12/30/2026 EUR 0.139
Solis Bond Co DAC 10.208 9/30/2024 EUR 45.400
IOG Plc 12.826 9/22/2025 EUR 8.001
Ferralum Metals Gr 10.000 12/30/2026 EUR 34.250
NCO Invest SA 10.000 12/30/2026 EUR 0.349
Codere Finance 2 L 11.000 9/30/2026 EUR 44.057
Oscar Properties H 11.270 7/5/2024 SEK 0.090
Codere Finance 2 L 12.750 11/30/2027 EUR 0.886
Virgolino de Olive 10.500 1/28/2018 USD 0.010
Virgolino de Olive 11.750 2/9/2022 USD 0.387
Virgolino de Olive 10.500 1/28/2018 USD 0.010
Fastator AB 12.500 9/25/2026 SEK 35.978
Turkiye Government 10.400 10/13/2032 TRY 48.600
R-Logitech Finance 10.250 9/26/2027 EUR 15.000
Codere Finance 2 L 13.625 11/30/2027 USD 1.001
Marginalen Bank Ba 12.695 SEK 40.002
Tinkoff Bank JSC V 11.002 USD 42.875
Fastator AB 12.500 9/26/2025 SEK 36.375
UkrLandFarming PLC 10.875 3/26/2018 USD 1.356
Immigon Portfolioa 10.055 EUR 14.875
Kvalitena AB publ 10.067 4/2/2024 SEK 45.000
Avangardco Investm 10.000 10/29/2018 USD 0.181
Codere Finance 2 L 13.625 11/30/2027 USD 1.001
Bilt Paper BV 10.360 USD 1.002
Fastator AB 12.500 9/24/2027 SEK 36.000
Ilija Batljan Inve 10.007 SEK 10.000
Codere Finance 2 L 11.000 9/30/2026 EUR 44.130
Plusplus Capital F 11.000 7/29/2026 EUR 7.273
Altice France Hold 10.500 5/15/2027 USD 34.776
Privatbank CJSC Vi 10.250 1/23/2018 USD 3.606
Virgolino de Olive 10.875 1/13/2020 USD 36.000
Saderea DAC 12.500 11/30/2026 USD 50.000
Sidetur Finance BV 10.000 4/20/2016 USD 0.804
Transcapitalbank J 10.000 USD 1.450
Virgolino de Olive 11.750 2/9/2022 USD 0.387
Virgolino de Olive 10.875 1/13/2020 USD 36.000
Privatbank CJSC Vi 11.000 2/9/2021 USD 0.500
Evocabank CJSC 11.000 9/27/2025 AMD 0.000
Privatbank CJSC Vi 10.875 2/28/2018 USD 5.085
UBS AG/London 10.000 3/23/2026 USD 33.390
UkrLandFarming PLC 10.875 3/26/2018 USD 1.356
Societe Generale S 23.500 3/3/2025 USD 40.800
Ameriabank CJSC 10.000 2/20/2025 AMD 9.250
Codere Finance 2 L 12.750 11/30/2027 EUR 0.886
Bulgaria Steel Fin 12.000 5/4/2013 EUR 0.216
Bank Julius Baer & 10.600 6/12/2025 CHF 98.950
BNP Paribas Emissi 15.000 9/25/2025 EUR 39.210
UBS AG/London 17.500 2/7/2025 USD 17.800
Societe Generale S 11.000 7/14/2026 USD 15.800
BNP Paribas Issuan 20.000 9/18/2026 EUR 36.870
Finca Uco Cjsc 13.000 11/16/2024 AMD 0.000
Societe Generale S 21.000 12/26/2025 USD 26.860
Citigroup Global M 25.530 2/18/2025 EUR 0.010
ACBA Bank OJSC 11.000 12/1/2025 AMD 0.000
Deutsche Bank AG/L 12.780 3/16/2028 TRY 47.354
Privatbank CJSC Vi 10.875 2/28/2018 USD 5.085
Elli Investments L 12.250 6/15/2020 GBP 1.129
Phosphorus Holdco 10.000 4/1/2019 GBP 0.789
Serica Energy Chin 12.500 9/27/2019 USD 1.500
Elli Investments L 12.250 6/15/2020 GBP 1.129
Credit Agricole Co 10.200 12/13/2027 TRY 47.917
Deutsche Bank AG/L 14.900 5/30/2028 TRY 49.457
Petromena ASA 10.850 11/19/2018 USD 0.622
Ukraine Government 11.000 3/24/2037 UAH 32.988
Ukraine Government 11.000 4/20/2037 UAH 33.166
Ukraine Government 11.000 4/24/2037 UAH 35.769
NTRP Via Interpipe 10.250 8/2/2017 USD 1.002
Bilt Paper BV 10.360 USD 1.002
Ukraine Government 11.000 2/16/2037 UAH 33.035
Ukraine Government 11.000 4/1/2037 UAH 32.982
KPNQwest NV 10.000 3/15/2012 EUR 0.842
Bank Vontobel AG 12.000 6/17/2025 CHF 34.200
Landesbank Baden-W 10.500 4/28/2025 EUR 13.910
Landesbank Baden-W 16.500 4/28/2025 EUR 15.550
Landesbank Baden-W 19.000 4/28/2025 EUR 16.440
DZ Bank AG Deutsch 20.400 3/28/2025 EUR 19.690
Bank Vontobel AG 20.000 7/31/2025 CHF 47.700
Leonteq Securities 20.000 1/22/2025 CHF 14.340
Zurcher Kantonalba 25.500 10/2/2024 CHF 51.730
Landesbank Baden-W 11.000 2/27/2026 EUR 17.850
Landesbank Baden-W 12.000 2/27/2026 EUR 19.000
Bank Vontobel AG 12.000 4/11/2025 CHF 46.600
Bank Vontobel AG 11.000 4/11/2025 CHF 20.100
Bank Vontobel AG 29.000 4/10/2025 USD 39.100
DZ Bank AG Deutsch 16.400 3/28/2025 EUR 47.540
DZ Bank AG Deutsch 18.500 3/28/2025 EUR 20.170
DZ Bank AG Deutsch 17.600 6/27/2025 EUR 21.950
BNP Paribas Emissi 24.000 12/30/2024 EUR 51.130
Bank Vontobel AG 14.000 3/5/2025 CHF 11.600
Vontobel Financial 16.000 3/28/2025 EUR 16.930
Swissquote Bank Eu 25.320 2/26/2025 CHF 40.100
DZ Bank AG Deutsch 13.200 3/28/2025 EUR 48.890
DZ Bank AG Deutsch 21.200 3/28/2025 EUR 49.670
DZ Bank AG Deutsch 23.600 3/28/2025 EUR 46.800
Raiffeisen Switzer 16.000 3/4/2025 CHF 14.040
Bank Vontobel AG 14.500 4/4/2025 CHF 47.800
Landesbank Baden-W 16.000 1/3/2025 EUR 11.140
Landesbank Baden-W 25.000 1/3/2025 EUR 11.270
Landesbank Baden-W 19.000 6/27/2025 EUR 17.030
Landesbank Baden-W 10.500 1/2/2026 EUR 15.140
BNP Paribas Emissi 13.000 12/30/2024 EUR 45.620
Raiffeisen Schweiz 13.000 3/25/2025 CHF 51.620
Landesbank Baden-W 19.000 1/3/2025 EUR 11.020
Landesbank Baden-W 22.000 1/3/2025 EUR 11.080
Landesbank Baden-W 14.000 6/27/2025 EUR 14.350
Landesbank Baden-W 16.000 6/27/2025 EUR 15.280
Landesbank Baden-W 21.000 6/27/2025 EUR 18.130
Vontobel Financial 11.000 12/31/2024 EUR 39.840
Vontobel Financial 16.750 12/31/2024 EUR 35.610
DZ Bank AG Deutsch 17.100 12/31/2024 EUR 49.190
Bank Vontobel AG 13.500 6/3/2025 USD 51.100
Leonteq Securities 24.000 1/16/2025 CHF 40.620
Vontobel Financial 20.250 12/31/2024 EUR 12.890
Raiffeisen Switzer 11.800 1/15/2025 CHF 57.340
Raiffeisen Switzer 13.900 1/15/2025 EUR 57.920
DZ Bank AG Deutsch 13.900 3/28/2025 EUR
Landesbank Baden-W 11.500 2/28/2025 EUR 12.850
Landesbank Baden-W 15.000 2/28/2025 EUR 12.940
HSBC Trinkaus & Bu 14.500 12/30/2024 EUR 7.660
Landesbank Baden-W 19.000 2/28/2025 EUR 13.580
DZ Bank AG Deutsch 11.500 12/31/2024 EUR 9.330
DZ Bank AG Deutsch 23.100 12/31/2024 EUR 32.870
DZ Bank AG Deutsch 12.700 12/31/2024 EUR 48.100
Vontobel Financial 13.000 12/31/2024 EUR 38.240
Vontobel Financial 14.750 12/31/2024 EUR 36.800
Vontobel Financial 17.250 12/31/2024 EUR 49.480
Vontobel Financial 20.000 12/31/2024 EUR 47.300
DZ Bank AG Deutsch 15.500 12/31/2024 EUR 38.400
Bank Vontobel AG 16.000 2/10/2025 CHF 52.000
Vontobel Financial 11.000 12/31/2024 EUR 32.270
DZ Bank AG Deutsch 10.500 1/22/2025 EUR 9.080
DZ Bank AG Deutsch 16.500 12/27/2024 EUR 12.060
Bank Julius Baer & 19.400 1/30/2025 CHF 52.150
Leonteq Securities 25.000 1/3/2025 CHF 44.510
Leonteq Securities 22.000 10/2/2024 CHF 36.430
Vontobel Financial 10.000 3/28/2025 EUR 51.700
Raiffeisen Schweiz 19.000 10/2/2024 CHF 41.030
Leonteq Securities 24.000 1/9/2025 CHF 25.460
Leonteq Securities 11.000 1/9/2025 CHF 42.300
Bank Vontobel AG 12.000 3/5/2025 CHF 48.200
Leonteq Securities 21.000 1/3/2025 CHF 22.510
Landesbank Baden-W 15.000 3/28/2025 EUR 11.750
Landesbank Baden-W 13.000 3/28/2025 EUR 11.390
Landesbank Baden-W 11.000 3/28/2025 EUR 11.200
DZ Bank AG Deutsch 14.200 12/31/2024 EUR 8.800
DZ Bank AG Deutsch 11.400 12/31/2024 EUR 47.080
DZ Bank AG Deutsch 12.800 12/31/2024 EUR 44.430
DZ Bank AG Deutsch 15.700 12/31/2024 EUR 40.180
DZ Bank AG Deutsch 17.300 12/31/2024 EUR 38.490
DZ Bank AG Deutsch 19.000 12/31/2024 EUR 37.050
DZ Bank AG Deutsch 14.200 12/31/2024 EUR 42.140
Leonteq Securities 20.000 3/11/2025 CHF 14.130
Raiffeisen Switzer 13.000 3/11/2025 CHF 53.460
Raiffeisen Switzer 16.500 3/11/2025 CHF 13.880
Landesbank Baden-W 11.000 1/2/2026 EUR 17.040
Landesbank Baden-W 16.000 1/2/2026 EUR 22.130
Landesbank Baden-W 13.000 6/27/2025 EUR 15.100
Landesbank Baden-W 16.000 6/27/2025 EUR 16.340
Landesbank Baden-W 15.000 1/3/2025 EUR 13.670
DZ Bank AG Deutsch 19.900 12/31/2024 EUR 50.980
Bank Julius Baer & 18.690 3/7/2025 CHF 52.400
Landesbank Baden-W 11.500 4/24/2026 EUR 20.290
Bank Vontobel AG 11.000 4/29/2025 CHF 27.500
Landesbank Baden-W 10.500 4/24/2026 EUR 19.050
Landesbank Baden-W 13.000 4/24/2026 EUR 22.310
Bank Vontobel AG 15.000 4/29/2025 CHF 52.800
Swissquote Bank SA 15.740 10/31/2024 CHF 14.770
DZ Bank AG Deutsch 14.300 12/31/2024 EUR 46.150
Landesbank Baden-W 18.000 1/3/2025 EUR 49.220
Vontobel Financial 29.200 1/17/2025 EUR 26.770
Raiffeisen Schweiz 15.000 1/22/2025 CHF 42.650
Landesbank Baden-W 14.000 1/24/2025 EUR 10.970
Vontobel Financial 18.500 12/31/2024 EUR 31.910
Vontobel Financial 20.250 12/31/2024 EUR 31.180
Vontobel Financial 16.500 12/31/2024 EUR 32.500
Vontobel Financial 11.250 12/31/2024 EUR 35.980
Vontobel Financial 13.000 12/31/2024 EUR 34.730
Vontobel Financial 14.750 12/31/2024 EUR 33.630
Vontobel Financial 26.450 1/24/2025 EUR 14.880
Landesbank Baden-W 16.000 11/22/2024 EUR 9.910
UBS AG/London 13.000 9/30/2024 CHF 9.110
Landesbank Baden-W 10.000 11/22/2024 EUR 44.530
Landesbank Baden-W 10.500 11/22/2024 EUR 11.910
Inecobank CJSC 10.000 4/28/2025 AMD 0.000
Goldman Sachs Inte 16.288 3/17/2027 USD 22.940
DZ Bank AG Deutsch 10.500 12/27/2024 EUR 45.880
DZ Bank AG Deutsch 18.200 3/28/2025 EUR 51.050
Leonteq Securities 19.000 11/22/2024 CHF 34.970
Armenian Economy D 10.500 5/4/2025 AMD 0.000
Finca Uco Cjsc 12.000 2/10/2025 AMD 0.000
Vontobel Financial 18.000 12/31/2024 EUR 41.180
DZ Bank AG Deutsch 10.750 12/27/2024 EUR 9.920
DZ Bank AG Deutsch 13.400 12/31/2024 EUR 42.960
DZ Bank AG Deutsch 19.100 12/31/2024 EUR 44.580
DZ Bank AG Deutsch 21.300 12/31/2024 EUR 41.030
Leonteq Securities 21.000 10/30/2024 CHF 32.770
UBS AG/London 21.600 8/2/2027 SEK 25.760
Societe Generale S 22.750 10/17/2024 USD 23.750
Leonteq Securities 24.000 1/13/2025 CHF 9.430
Landesbank Baden-W 11.500 10/25/2024 EUR 14.330
Landesbank Baden-W 13.000 10/25/2024 EUR 13.200
Landesbank Baden-W 16.000 10/25/2024 EUR 11.500
Landesbank Baden-W 12.000 1/3/2025 EUR 11.300
Landesbank Baden-W 18.000 1/3/2025 EUR 10.400
Vontobel Financial 12.500 12/31/2024 EUR 38.110
Vontobel Financial 14.250 12/31/2024 EUR 36.460
Vontobel Financial 10.750 12/31/2024 EUR 39.770
Landesbank Baden-W 15.000 1/3/2025 EUR 10.430
Bank Vontobel AG 13.500 1/8/2025 CHF 7.400
UBS AG/London 11.000 1/20/2025 EUR 55.650
Bank Vontobel AG 12.000 11/11/2024 CHF 53.900
BNP Paribas Emissi 14.000 12/30/2024 EUR 49.450
BNP Paribas Emissi 16.000 12/30/2024 EUR 32.870
HSBC Trinkaus & Bu 22.250 6/27/2025 EUR 15.090
Raiffeisen Schweiz 20.000 10/16/2024 CHF 23.660
Raiffeisen Schweiz 10.000 10/4/2024 CHF 31.500
BNP Paribas Emissi 17.000 12/30/2024 EUR 46.020
BNP Paribas Emissi 17.000 12/30/2024 EUR 31.860
BNP Paribas Emissi 17.000 12/30/2024 EUR 49.380
HSBC Trinkaus & Bu 17.500 6/27/2025 EUR 11.990
HSBC Trinkaus & Bu 12.750 6/27/2025 EUR 9.640
HSBC Trinkaus & Bu 11.250 6/27/2025 EUR 49.420
HSBC Trinkaus & Bu 10.250 6/27/2025 EUR 38.710
HSBC Trinkaus & Bu 15.500 6/27/2025 EUR 41.720
UniCredit Bank Gmb 19.500 12/31/2024 EUR 47.010
UniCredit Bank Gmb 18.600 12/31/2024 EUR 48.780
UniCredit Bank Gmb 16.600 12/31/2024 EUR 53.030
HSBC Trinkaus & Bu 16.300 12/30/2024 EUR 24.850
HSBC Trinkaus & Bu 13.100 12/30/2024 EUR 27.410
HSBC Trinkaus & Bu 17.400 12/30/2024 EUR 7.120
HSBC Trinkaus & Bu 12.900 12/30/2024 EUR 51.560
Landesbank Baden-W 18.000 11/22/2024 EUR 9.290
Landesbank Baden-W 14.500 11/22/2024 EUR 10.250
HSBC Trinkaus & Bu 13.400 12/30/2024 EUR 51.080
HSBC Trinkaus & Bu 15.100 3/28/2025 EUR 27.910
HSBC Trinkaus & Bu 11.000 3/28/2025 EUR 31.380
HSBC Trinkaus & Bu 13.400 6/27/2025 EUR 30.810
HSBC Trinkaus & Bu 15.200 12/30/2024 EUR 5.500
HSBC Trinkaus & Bu 14.400 3/28/2025 EUR 6.960
HSBC Trinkaus & Bu 12.800 3/28/2025 EUR 50.100
UniCredit Bank Gmb 18.500 12/31/2024 EUR 45.080
UniCredit Bank Gmb 19.300 12/31/2024 EUR 43.600
BNP Paribas Issuan 16.000 9/18/2026 EUR 62.060
Leonteq Securities 25.000 12/18/2024 CHF 42.640
Bank Vontobel AG 20.500 11/4/2024 CHF 28.200
HSBC Trinkaus & Bu 10.250 12/30/2024 EUR 39.350
UniCredit Bank Gmb 18.800 12/31/2024 EUR 38.020
UniCredit Bank Gmb 19.700 12/31/2024 EUR 37.090
HSBC Trinkaus & Bu 17.500 12/30/2024 EUR 37.670
BNP Paribas Issuan 19.000 9/18/2026 EUR 0.980
Zurcher Kantonalba 10.500 2/4/2025 EUR 53.850
DZ Bank AG Deutsch 14.000 12/20/2024 EUR 45.750
Finca Uco Cjsc 13.000 5/30/2025 AMD 9.781
HSBC Trinkaus & Bu 16.300 3/28/2025 EUR 7.700
HSBC Trinkaus & Bu 12.800 11/22/2024 EUR 26.750
UniCredit Bank Gmb 12.800 10/10/2024 EUR 51.180
HSBC Trinkaus & Bu 13.100 10/25/2024 EUR 25.860
HSBC Trinkaus & Bu 13.900 12/30/2024 EUR 48.600
HSBC Trinkaus & Bu 14.800 12/30/2024 EUR 48.050
HSBC Trinkaus & Bu 14.100 12/30/2024 EUR 26.440
HSBC Trinkaus & Bu 11.400 12/30/2024 EUR 29.090
HSBC Trinkaus & Bu 16.000 3/28/2025 EUR 27.420
HSBC Trinkaus & Bu 11.500 6/27/2025 EUR 32.640
HSBC Trinkaus & Bu 10.200 10/25/2024 EUR 29.580
HSBC Trinkaus & Bu 15.700 11/22/2024 EUR 24.190
HSBC Trinkaus & Bu 10.000 11/22/2024 EUR 30.260
UniCredit Bank Gmb 16.550 8/18/2025 USD 21.260
Landesbank Baden-W 10.000 10/24/2025 EUR 14.550
Leonteq Securities 24.000 12/27/2024 CHF 43.690
Leonteq Securities 23.000 12/27/2024 CHF 33.990
UniCredit Bank Gmb 17.200 12/31/2024 EUR 35.430
UniCredit Bank Gmb 18.000 12/31/2024 EUR 34.620
UniCredit Bank Gmb 18.800 12/31/2024 EUR 33.880
UniCredit Bank Gmb 19.600 12/31/2024 EUR 33.190
HSBC Trinkaus & Bu 12.500 12/30/2024 EUR 49.700
HSBC Trinkaus & Bu 15.900 3/28/2025 EUR 26.950
HSBC Trinkaus & Bu 13.500 12/30/2024 EUR 49.020
HSBC Trinkaus & Bu 16.100 12/30/2024 EUR 24.350
HSBC Trinkaus & Bu 11.300 6/27/2025 EUR 31.850
HSBC Trinkaus & Bu 10.400 10/25/2024 EUR 27.890
HSBC Trinkaus & Bu 12.600 11/22/2024 EUR 26.070
Leonteq Securities 25.000 12/11/2024 CHF 38.400
HSBC Trinkaus & Bu 15.100 12/30/2024 EUR 44.300
HSBC Trinkaus & Bu 11.100 12/30/2024 EUR 28.300
HSBC Trinkaus & Bu 13.300 6/27/2025 EUR 30.440
HSBC Trinkaus & Bu 15.600 11/22/2024 EUR 23.660
Erste Group Bank A 14.500 5/31/2026 EUR 34.950
HSBC Trinkaus & Bu 15.000 3/28/2025 EUR 27.400
HSBC Trinkaus & Bu 12.800 10/25/2024 EUR 25.190
HSBC Trinkaus & Bu 10.300 11/22/2024 EUR 28.610
UniCredit Bank Gmb 19.800 12/31/2024 EUR 51.210
HSBC Trinkaus & Bu 15.200 12/30/2024 EUR 25.590
HSBC Trinkaus & Bu 11.100 12/30/2024 EUR 29.790
HSBC Trinkaus & Bu 13.400 3/28/2025 EUR 29.200
Landesbank Baden-W 10.000 6/27/2025 EUR 13.310
Landesbank Baden-W 14.000 6/27/2025 EUR 14.500
HSBC Trinkaus & Bu 11.600 3/28/2025 EUR 30.920
HSBC Trinkaus & Bu 18.100 12/30/2024 EUR 6.350
HSBC Trinkaus & Bu 15.700 12/30/2024 EUR 6.190
ACBA Bank OJSC 11.500 3/1/2026 AMD 0.000
National Mortgage 12.000 3/30/2026 AMD 0.000
Leonteq Securities 10.000 11/12/2024 CHF 49.690
Societe Generale S 20.000 11/28/2025 USD 12.920
UniCredit Bank Gmb 13.800 2/28/2025 EUR 49.800
UniCredit Bank Gmb 14.500 2/28/2025 EUR 48.140
UniCredit Bank Gmb 19.100 12/31/2024 EUR 40.620
Leonteq Securities 10.340 8/31/2026 EUR 47.110
UniCredit Bank Gmb 10.700 2/28/2025 EUR 37.030
UniCredit Bank Gmb 11.700 2/28/2025 EUR 35.790
UniCredit Bank Gmb 12.800 2/28/2025 EUR 34.480
UniCredit Bank Gmb 14.500 11/22/2024 EUR 46.750
UniCredit Bank Gmb 13.100 2/28/2025 EUR 51.620
UniCredit Bank Gmb 20.000 12/31/2024 EUR 39.190
Landesbank Baden-W 11.000 11/22/2024 EUR 11.980
HSBC Trinkaus & Bu 19.600 12/30/2024 EUR 7.240
UniCredit Bank Gmb 10.700 11/22/2024 EUR 46.040
Landesbank Baden-W 14.000 10/24/2025 EUR 17.520
Societe Generale S 20.000 9/18/2026 USD 12.500
Societe Generale S 15.600 8/25/2026 USD
UBS AG/London 20.000 11/29/2024 USD 17.810
UniCredit Bank Gmb 10.500 12/22/2025 EUR 40.800
UniCredit Bank Gmb 14.700 11/22/2024 EUR 48.980
UniCredit Bank Gmb 12.900 11/22/2024 EUR 33.060
UBS AG/London 14.500 10/14/2024 CHF 34.300
UBS AG/London 15.750 10/21/2024 CHF 36.150
UniCredit Bank Gmb 13.000 11/22/2024 EUR 34.590
UniCredit Bank Gmb 10.900 11/22/2024 EUR 38.140
UniCredit Bank Gmb 10.200 11/22/2024 EUR 52.700
UniCredit Bank Gmb 10.000 11/22/2024 EUR 40.290
UniCredit Bank Gmb 11.900 11/22/2024 EUR 36.250
UniCredit Bank Gmb 11.000 11/22/2024 EUR 50.920
Raiffeisen Schweiz 10.000 12/31/2024 CHF 49.950
Landesbank Baden-W 10.000 10/25/2024 EUR 6.840
Landesbank Baden-W 11.500 10/25/2024 EUR 6.190
EFG International 11.120 12/27/2024 EUR 43.460
Bank Julius Baer & 12.720 2/17/2025 CHF 34.550
Bank Vontobel AG 15.500 11/18/2024 CHF 36.300
UniCredit Bank Gmb 14.200 11/22/2024 EUR 31.770
Landesbank Baden-W 13.000 1/3/2025 EUR 8.060
Landesbank Baden-W 11.000 1/3/2025 EUR 8.210
Landesbank Baden-W 12.000 1/24/2025 EUR 10.370
Landesbank Baden-W 15.500 1/24/2025 EUR 9.990
Corner Banca SA 10.000 11/8/2024 CHF 48.170
UniCredit Bank Gmb 10.700 2/17/2025 EUR 20.030
Armenian Economy D 11.000 10/3/2025 AMD 0.000
UniCredit Bank Gmb 10.700 2/3/2025 EUR 19.760
UniCredit Bank Gmb 11.600 2/28/2025 EUR 46.070
UniCredit Bank Gmb 19.300 12/31/2024 EUR 42.080
UniCredit Bank Gmb 10.400 2/28/2025 EUR 48.520
UniCredit Bank Gmb 13.900 11/22/2024 EUR 51.290
UBS AG/London 14.000 9/25/2028 EUR 44.440
UniCredit Bank Gmb 10.500 4/7/2026 EUR 33.610
Leonteq Securities 12.000 10/11/2024 EUR 47.010
UBS AG/London 12.000 11/4/2024 EUR 50.750
Phosphorus Holdco 10.000 4/1/2019 GBP 0.789
PA Resources AB 13.500 3/3/2016 SEK 0.124
Tonon Luxembourg S 12.500 5/14/2024 USD 2.216
Tonon Luxembourg S 12.500 5/14/2024 USD 2.216
Banco Espirito San 10.000 12/6/2021 EUR 0.058
Lehman Brothers Tr 18.250 10/2/2008 USD 0.100
Lehman Brothers Tr 14.900 11/16/2010 EUR 0.100
Lehman Brothers Tr 11.000 12/20/2017 AUD 0.100
Lehman Brothers Tr 11.000 12/20/2017 AUD 0.100
Lehman Brothers Tr 11.000 12/20/2017 AUD 0.100
Lehman Brothers Tr 11.000 2/16/2009 CHF 0.100
Lehman Brothers Tr 10.000 2/16/2009 CHF 0.100
Lehman Brothers Tr 11.750 3/1/2010 EUR 0.100
Lehman Brothers Tr 10.600 4/22/2014 MXN 0.100
Lehman Brothers Tr 16.000 11/9/2008 USD 0.100
Lehman Brothers Tr 10.000 5/22/2009 USD 0.100
Lehman Brothers Tr 10.442 11/22/2008 CHF 0.100
Lehman Brothers Tr 23.300 9/16/2008 USD 0.100
Lehman Brothers Tr 12.400 6/12/2009 USD 0.100
Lehman Brothers Tr 11.000 7/4/2011 USD 0.100
Lehman Brothers Tr 13.150 10/30/2008 USD 0.100
Sidetur Finance BV 10.000 4/20/2016 USD 0.804
Lehman Brothers Tr 10.500 8/9/2010 EUR 0.100
Lehman Brothers Tr 10.000 3/27/2009 USD 0.100
Lehman Brothers Tr 11.000 6/29/2009 EUR 0.100
Lehman Brothers Tr 11.000 12/19/2011 USD 0.100
Lehman Brothers Tr 13.500 11/28/2008 USD 0.100
Bulgaria Steel Fin 12.000 5/4/2013 EUR 0.216
Lehman Brothers Tr 13.000 7/25/2012 EUR 0.100
Lehman Brothers Tr 16.000 10/8/2008 CHF 0.100
Lehman Brothers Tr 13.000 2/16/2009 CHF 0.100
Lehman Brothers Tr 10.000 10/23/2008 USD 0.100
Lehman Brothers Tr 10.000 10/22/2008 USD 0.100
Lehman Brothers Tr 16.000 10/28/2008 USD 0.100
Lehman Brothers Tr 16.200 5/14/2009 USD 0.100
Lehman Brothers Tr 15.000 6/4/2009 CHF 0.100
Lehman Brothers Tr 17.000 6/2/2009 USD 0.100
Lehman Brothers Tr 13.500 6/2/2009 USD 0.100
Lehman Brothers Tr 10.000 6/17/2009 USD 0.100
Lehman Brothers Tr 11.000 7/4/2011 CHF 0.100
Lehman Brothers Tr 12.000 7/4/2011 EUR 0.100
Lehman Brothers Tr 16.000 12/26/2008 USD 0.100
Lehman Brothers Tr 13.432 1/8/2009 ILS 0.100
Lehman Brothers Tr 13.000 12/14/2012 USD 0.100
Ukraine Government 11.000 4/8/2037 UAH 32.979
Lehman Brothers Tr 15.000 3/30/2011 EUR 0.100
Lehman Brothers Tr 14.900 9/15/2008 EUR 0.100
Ukraine Government 11.000 4/23/2037 UAH 32.974
BLT Finance BV 12.000 2/10/2015 USD 10.500
Teksid Aluminum Lu 12.375 7/15/2011 EUR 0.619
Lehman Brothers Tr 16.800 8/21/2009 USD 0.100
Lehman Brothers Tr 14.100 11/12/2008 USD 0.100
Lehman Brothers Tr 11.250 12/31/2008 USD 0.100
Lehman Brothers Tr 12.000 7/13/2037 JPY 0.100
Lehman Brothers Tr 10.000 6/11/2038 JPY 0.100
*********
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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contact Peter Chapman at 215-945-7000.
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