/raid1/www/Hosts/bankrupt/TCREUR_Public/250204.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Tuesday, February 4, 2025, Vol. 26, No. 25
Headlines
A R M E N I A
ARMENIA: Fitch Affirms 'BB-' Foreign Currency IDR, Outlook Stable
F R A N C E
CASINO GUICHARD: EUR1.53BB Bank Debt Trades at 18% Discount
I R E L A N D
CAIRN CLO XIX: S&P Assigns B-(sf) Rating on Class F Notes
CVC CORDATUS XXIV: Fitch Affirms 'B-sf' Rating on Class F-R Notes
HALO (BELFAST): Teneo Financial Named as Administrators
HARVEST CLO XXIII: Fitch Affirms 'BB+sf' Rating on Class F Notes
HENLEY CLO II: Fitch Affirms 'B-sf' Rating on Class F-R Notes
HENLEY CLO V: Fitch Affirms 'B-sf' Rating on Class F Notes
NEWHAVEN CLO: Moody's Cuts EUR9.6MM Class F-R Notes Rating to Caa1
PALMER SQUARE 2021-1: Fitch Affirms 'BB+sf' Rating on 2 Tranches
PALMER SQUARE 2021-2: Fitch Alters Outlook on BB+sf Rating to Neg.
I T A L Y
CEDACRI SPA: Fitch Alters Outlook on 'B' LongTerm IDR to Stable
EFESTO BIDCO: Moody's Assigns First Time 'B3' Corp. Family Rating
L U X E M B O U R G
ODYSSEY EUROPE: S&P Downgrades LT ICR to 'CCC' on Refinancing Risk
N E T H E R L A N D S
ENSTALL GROUP: $375 MM Bank Debt Trades at 18% Discount
SPRINT BIDCO: EUR700.5MM Bank Debt Trades at 84% Discount
N O R W A Y
AXACTOR ASA: Moody's Affirms 'B3' CFR, Outlook Remains Negative
S P A I N
KRONOSNET CX: EUR858.8MM Bank Debt Trades at 17% Discount
LA CASTILLEJA: EUR28.8MM Bank Debt Trades at 19% Discount
T U R K E Y
ISTANBUL TAKAS: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable
U N I T E D K I N G D O M
CLARA.NET HOLDINGS: GBP110.2MM Bank Debt Trades at 18% Discount
HALO (APPLEDORE): Teneo Financial Named as Administrators
HALO (ARNISH): Teneo Financial Named as Administrators
HALO (HOLDINGS): Teneo Financial Named as Administrators
HALO (METHIL): Teneo Financial Named as Administrators
HALO (PEOPLE & SKILLS): Teneo Financial Named as Administrators
HOSPITAL COMPANY: Moody's Cuts Rating on GBP152MM Sec. Bonds to Ba1
KANTAR GLOBAL: S&P Affirms 'B-' ICR & Alters Outlook to Positive
KCA DEUTAG: S&P Withdraws 'B' LongTerm Issuer Credit Rating
LOTTIE LONDON: FRP Advisory Named as Administrators
M6 CARPETS: Leonard Curtis Named as Administrators
MORLEY GPCO: FRP Advisory Named as Administrators
MORLEY NOMINEE: FRP Advisory Named as Administrators
SMARTPA GLOBAL: FRP Advisory Named as Administrators
SYNTHOMER PLC: S&P Lowers ICR to 'B+' on Sustained High Leverage
THOROLD DEWLING: Leonard Curtis Named as Administrators
- - - - -
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A R M E N I A
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ARMENIA: Fitch Affirms 'BB-' Foreign Currency IDR, Outlook Stable
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Fitch Ratings has affirmed Armenia's Long-Term (LT)
Foreign-Currency (FC) Issuer Default Rating (IDR) at 'BB-' with a
Stable Outlook.
Key Rating Drivers
Credit Fundamentals: Armenia's 'BB-' rating reflects per-capita
income and governance indicators that are in line with peers,
stable growth prospects and a robust macroeconomic policy
framework. Set against these strengths are the small size of the
economy, large fiscal deficits relative to peers, relatively weak
external finances, high financial sector dollarisation and
geopolitical risks.
Higher Fiscal Deficits: Fitch projects the general government
deficit to increase to 5.5% of GDP in 2025 (2024: 4.7%; current
'BB' median: 3%), reflecting an expansionary fiscal policy. This
incorporates the costs of integrating about 65,000 refugees from
Nagorno-Karabakh (since 2023) and higher military expenditure. The
planned introduction of a universal health insurance programme from
2026 will increase expenditure by about 1.3% of GDP/year, keeping
the deficit at 5.4% of GDP in 2026.
Adherence to Fiscal Rules: Fitch assumes the authorities will
comply with fiscal rules that are triggered when gross general
government debt (GGGD)/GDP exceeds 50%, including moderating
current expenditure (excluding interest payments) growth to below
historic nominal economic growth rates. While planned capex will be
larger than the fiscal deficit (both as a percentage of GDP) as per
the fiscal rules, Fitch expects capacity constraints to continue to
limit project execution.
Rising Debt Trajectory, FX Risk: The fiscal loosening is projected
to increase GGGD from an estimated 49.7% in 2024 to 55% by
end-2026, in line with projected peer medians. Debt dynamics are
highly exposed to currency risk, given that, as of October 2024,
48.6% of GGGD was foreign-exchange (FX)-denominated. However,
market risks are mitigated by the fixed interest-rate structure of
85.7% of outstanding debt, and the high (75%) proportion of
concessional debt owed to multilateral and bilateral lenders within
external government debt.
The authorities plan to issue a Eurobond in 1Q25 to redeem a
maturing USD313 million Eurobond in March 2025. They also plan an
overfinancing on external (including through borrowing from
multilateral organisations) and domestic markets in 2025-2026,
anticipating budgetary and project finance needs.
Negotiations with Azerbaijan: Armenia and Azerbaijan have
reportedly reached an agreement on certain key points for an
eventual peace treaty, including border delimitation. The
flexibility and willingness from both parties to resolve the
outstanding issues and the timing for a potential resolution remain
uncertain. Fitch does not expect a sustained military re-escalation
of the conflict. A comprehensive peace treaty could potentially
unlock trade routes to Turkiye and benefit Armenia's long-term
growth potential.
Worsening Relations with Russia: Armenia's relations with Russia
appear to be worsening, as Armenia is considering EU membership,
which may be incompatible with its membership in the Russian-led
Eurasian Economic Union. Prime Minister Nikol Pashinyan has
reportedly expressed his desire to leave the Russia-led Collective
Security Treaty Organization. In its view, a fundamental breakdown
in relations is unlikely given Armenia's dependence on Russia for
energy and trade (24% of exports and 56% of imports). Fitch expects
Armenian banks to continue to comply with Western sanctions on
Russia.
Moderating Growth: Fitch estimates the economy to have grown by 6%
in 2024 (vs 8.3% in 2023; 12.6% in 2022) as the spillovers of the
large increase in migration from Russia and Ukraine, as well as the
refugee influx from Nagorno-Karabakh, have abated. Fitch has
reduced its growth expectations for 2025 to 4.8% from 5.5%, given
that the opening of the Amulsar gold mine has been pushed back to
at least 4Q25 (from 1Q25). Fitch expects growth to ease to 4.5% in
2026, as the services sector growth may be difficult to sustain,
and as credit growth moderates, although production from Amulsar
could provide an upside.
Weak External Balance Sheet: External finances are a rating
weakness for Armenia, given its record of large current account
deficits (CADs) and high net external debt relative to rating
peers. The CAD was 4.2% of GDP in 1Q24-3Q24 (current 'BB' median:
2.2%). The large flow of gold re-exports (USD4.9 billion,
equivalent to 47% of total Armenian goods exports) from Russia to
the United Arab Emirates, in 1Q24-3Q24 has significantly moderated,
and is not likely to recur. Fitch expects the CAD to average 4.3%
of GDP in 2025-2026, characterised by continued large goods
deficits and services surpluses.
International reserve coverage fell to just 2 months of current
external payments (CXP) in 2024, although this was skewed by the
large increase in re-exported gold imports. Excluding these,
coverage was 2.7 months of CXP, and Fitch expects it to average 3.2
months in 2025-2026 (current 'BB' median: 4.9). Fitch expects that
authorities will not draw down the USD121 million available under
the IMF Stand-By Arrangement (expiring this year), and will treat
it as a precautionary buffer. Net external debt will be about 2x
the projected 'BB' median, averaging 26.8% of GDP in 2025-2026.
Stable Inflation; High Dollarisation: Inflation averaged 0.3% of
GDP in 2024, driven partly by base effects, food prices, as well as
zero growth in core inflation. Inflation will average 3.3% in
2025-2026 given Fitch's expectation of a depreciation of the
Armenian dram, and fiscal policy loosening. Policy rates were cut
by a cumulative 225bp in 2024; the scope for further cuts is
limited.
New Inflation Target: Effective January 2025, the Central Bank of
Armenia reduced its medium-term inflation target to 3% (with a
variation band of +/-1 pp). Armenia has a record of low inflation
relative to rating peers, but also has an inconsistent record of
meeting the previous inflation target of 4% with a tolerance band
of +/-1.5pp, which was introduced in 2006. Fitch expects the
authorities to remain largely committed to a floating exchange
rate.
Armenia has an ESG Relevance Score of '5' for Political Stability
and Rights, and '5+' for the Rule of Law, Institutional and
Regulatory Quality, and Control of Corruption. These scores reflect
the high weight that the World Bank Governance Indicators (WBGI)
have in its proprietary Sovereign Rating Model. Armenia has a
medium WBGI ranking at the 45th percentile, reflecting a moderate
level of rights for participation in the political process,
relatively high geopolitical risks, moderate levels of political
stability, moderate institutional capacity and rule of law and a
moderate level of corruption.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Public Finances: Macroeconomic or policy developments that result
in a rapid increase in general government debt/GDP.
- External Finances: Increased external vulnerabilities, for
example as a result of a sustained decline in international
reserves or wider CADs.
- Structural: A materialisation of geopolitical risks that
undermines political and economic stability.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Macro: Increased confidence in the sustainability of high growth
rates relative to peers, for example, due to a durable decline in
geopolitical risks that results in a sustained increase in GDP per
capita.
- Public Finances: Fiscal consolidation that supports a decline in
general government debt/GDP, and deepening of local-currency
funding sources that durably reduces the FX proportion of
government debt.
Sovereign Rating Model (SRM) and Qualitative Overlay (QO)
Fitch's proprietary SRM assigns Armenia a score equivalent to a
rating of 'BB' on the LT FC IDR scale.
In accordance with its rating criteria, Fitch's sovereign rating
committee decided not to adopt the score indicated by the SRM as
the starting point for its analysis because, in its view, the SRM
output has migrated to 'BB', but, in its view, this is potentially
a temporary deviation. Consequently, the committee decided to adopt
'BB-' as the starting point for its analysis, unchanged from the
prior committee.
Fitch's sovereign rating committee did not adjust the output from
the adopted SRM score to arrive at the final LT FC IDR.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to an LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable or not fully reflected in
the SRM.
Country Ceiling
The Country Ceiling for Armenia is 'BB', one notch above the LT FC
IDR. This reflects moderate constraints and incentives, relative to
the IDR, against capital or exchange controls being imposed that
would prevent or significantly impede the private sector from
converting LC into FC and transferring the proceeds to non-resident
creditors to service debt payments.
Fitch's Country Ceiling Model produced a starting point uplift of
+1 notch above the IDR. Fitch's rating committee did not apply a
qualitative adjustment to the model result.
Summary of Data Adjustments
n/a
ESG Considerations
Armenia has an ESG Relevance Score of '5' for Political Stability
and Rights as World Bank Worldwide Governance Indicators have the
highest weight in Fitch's SRM and are, therefore, highly relevant
to the rating and a key rating driver with a high weight. As
Armenia has a percentile rank below 50 for the respective
Governance Indicators, this has a negative impact on the credit
profile.
Armenia has an ESG Relevance Score of '5+' for Rule of Law,
Institutional & Regulatory Quality, and Control of Corruption as
WBGI have the highest weight in Fitch's SRM and are, therefore,
highly relevant to the rating and a key rating driver with a high
weight. As Armenia has a percentile rank above 50 for the
respective Governance Indicators, this has a positive impact on the
credit profile.
Armenia has an ESG Relevance Score of '4+' for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
WBGI is relevant to the rating and a rating driver. As Armenia has
a percentile rank above 50 for the respective Governance Indicator,
this has a positive impact on the credit profile.
Armenia has an ESG Relevance Score of '4+' for Creditor Rights as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Armenia, as for all sovereigns. As Armenia
has a record of 20+ years without a restructuring of public debt
and captured in its SRM variable, this has a positive impact on the
credit profile.
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
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Armenia LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Country Ceiling BB Affirmed BB
senior
unsecured LT BB- Affirmed BB-
Senior
Unsecured-Local
currency LT BB- Affirmed BB-
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F R A N C E
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CASINO GUICHARD: EUR1.53BB Bank Debt Trades at 18% Discount
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Participations in a syndicated loan under which Casino Guichard
Perrachon SA is a borrower were trading in the secondary market
around 81.7 cents-on-the-dollar during the week ended Friday,
January 31, 2025, according to Bloomberg's Evaluated Pricing
service data.
The EUR1.53 billion Term loan facility is scheduled to mature on
March 30, 2027. The amount is fully drawn and outstanding.
Casino Guichard-Perrachon SA operates a wide range of hypermarkets,
supermarkets, and convenience stores. The Company operates stores
in Europe and South America. The Company's country of domicile is
France.
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I R E L A N D
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CAIRN CLO XIX: S&P Assigns B-(sf) Rating on Class F Notes
---------------------------------------------------------
S&P Global Ratings assigned credit ratings to Cairn CLO XIX DAC's
class A, B-1, B-2, C, D, E, and F notes. The issuer also issued
unrated subordinated notes.
Under the transaction documents, the rated notes will pay quarterly
interest unless a frequency switch event occurs. Following this,
the notes will switch to semiannual payments.
This transaction has a two year non-call period and the portfolio's
reinvestment period will end approximately five years after
closing.
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 governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
Portfolio benchmarks
S&P Global Ratings weighted-average rating factor 2,629.14
Default rate dispersion 687.62
Weighted-average life (years) 4.98
Weighted-average life (years) extended
to match reinvestment period 5.21
Obligor diversity measure 129.34
Industry diversity measure 18.28
Regional diversity measure 1.19
Transaction key metrics
Total par amount (mil. EUR) 450.00
Defaulted assets (mil. EUR) 0
Number of performing obligors 162
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 1.44
'AAA' target portfolio weighted-average recovery (%) 36.86
Target weighted-average spread (net of floors, %) 3.85
Target weighted-average coupon (%) 4.26
Rating rationale
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 conducted our credit and cash
flow analysis by applying our criteria for corporate cash flow
CDOs.
"In our cash flow analysis, we modelled the EUR450 million par
amount, the target weighted-average spread of 3.85%, the target
weighted-average coupon of 4.26%, and the target weighted-average
recovery rates. We applied various cash flow stress scenarios,
using four different default patterns, in conjunction with
different interest rate stress scenarios for each liability rating
category.
"The transaction'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, the transaction's exposure to country risk is 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.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-1 and B-2 to F notes could
withstand stresses commensurate with higher ratings than those we
have assigned. However, as the CLO is still in its reinvestment
phase, during which the transaction's credit risk profile could
deteriorate, we capped our ratings on the notes. The class A notes
could withstand stresses commensurate with the assigned rating.
"In addition to our standard analysis, to provide an indication of
how rising pressures among speculative-grade corporates could
affect our ratings on European CLO transactions, we have also
included the sensitivity of the ratings on the class A to E notes
based on four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F notes."
Environmental, social, and governance
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit or limit assets from being
related to certain industries. Since the exclusion of assets from
these industries does not result in material differences between
the transaction and our ESG benchmark for the sector, no specific
adjustments have been made in our rating analysis to account for
any ESG-related risks or opportunities."
Ratings list
Amount Credit
Class Rating* (mil. EUR) enhancement (%) Interest rate§
A AAA (sf) 279.00 38.00 Three/six-month EURIBOR
plus 1.30%
B-1 AA (sf) 42.60 26.76 Three/six-month EURIBOR
plus 2.00%
B-2 AA (sf) 8.00 26.76 4.80%
C A (sf) 25.90 21.00 Three/six-month EURIBOR
plus 2.40%
D BBB- (sf) 31.50 14.00 Three/six-month EURIBOR
plus 3.50%
E BB- (sf) 20.20 9.51 Three/six-month EURIBOR
plus 6.00%
F B- (sf) 13.50 6.51 Three/six-month EURIBOR
plus 8.52%
Sub. Notes NR 36.25 N/A N/A
*S&P's ratings on the class A, B-1, and B-2 notes address timely
interest and ultimate principal payments. Its ratings on the class
C, D, E, and F notes address ultimate interest and principal
payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
CVC CORDATUS XXIV: Fitch Affirms 'B-sf' Rating on Class F-R Notes
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Fitch Ratings has upgraded CVC Cordatus Loan Fund XXIV DAC Class C
to E notes, and affirmed the rest.
Entity/Debt Rating Prior
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CVC Cordatus Loan
Fund XXIV DAC
A XS2511417979 LT AAAsf Affirmed AAAsf
B-2 XS2511417110 LT AAsf Affirmed AAsf
Class B1-R XS2786924691 LT AAsf Affirmed AAsf
Class C-R XS2786924774 LT A+sf Upgrade Asf
Class D-R XS2786925078 LT BBB+sf Upgrade BBBsf
Class E-R XS2786925235 LT BB+sf Upgrade BBsf
Class F-R XS2786925318 LT B-sf Affirmed B-sf
Transaction Summary
CVC Cordatus Loan Fund XXIV DAC is a securitisation of mainly
senior secured obligations (at least 90%) with a component of
senior unsecured, mezzanine, second-lien loans and high-yield
bonds. The portfolio is actively managed by CVC Credit Partners
Investment Management Limited (CVC).
KEY RATING DRIVERS
Deleveraging; Better-Than-Expected Asset Performance: The rating
actions reflect the transaction's deleveraging and resilient
performance with portfolio losses below rating cases. They also
reflect manageable near- and medium-term refinancing risk, with
only 3.72% of the assets in the portfolio maturing before 2026.
The class A notes have deleveraged EUR14.3 million since the last
review based on the trustee report dated December 2024, increasing
credit enhancement CE for all notes. The total par loss is limited
at 0.2% of target par, well below its rating case assumptions. The
portfolio has only one reported default at 0.2% of the collateral
balance. The transaction is passing all tests except the fixed-rate
limit, according to the trustee report.
Large Cushion Supports Stable Outlooks: All notes have comfortable
default-rate buffers to support their ratings and should be capable
of absorbing further defaults in the portfolio. The notes have
sufficient credit protection to withstand deterioration in the
credit quality of the portfolio at their rating levels.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the transaction's underlying obligors at 'B'/'B-'. The weighted
average rating factor (WARF), as calculated by Fitch, is 26.7.
High Recovery Expectations: Senior secured obligations comprise 96%
of the portfolio. Fitch views the recovery prospects for these
assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate (WARR) of the current portfolio is 58.6%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration is 16.1%, and no obligor represents more than 2.1% of
the portfolio balance, as calculated by Fitch.
Reinvesting Transaction: Although the transaction exited its
reinvestment period in September 2023, the manager can reinvest
unscheduled principal proceeds and sale proceeds from credit-risk
obligations, subject to compliance with the reinvestment criteria.
Given the manager's ability to reinvest, Fitch's analysis is based
on a stressed portfolio using Fitch test matrix specified in the
transaction documentation.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
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 has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
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
Fitch does not provide ESG relevance scores for CVC Cordatus Loan
Fund XXIV DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
HALO (BELFAST): Teneo Financial Named as Administrators
-------------------------------------------------------
Halo (Belfast) Realisations Limited was placed into administration
proceedings in The High Court of Justice in Northern Ireland
Chancery Division (Company Insolvency), and Clare Boardman and
Gavin George Scott Park, both of Teneo Financial Advisory Limited,
were appointed as administrators on Jan. 27, 2025.
Halo (Belfast), fka Harland & Wolff (Belfast) Limited, engages in
engineering activities.
Its registered office is c/o Donaldson Legal Consulting LLP, at 3
St Helens Business Park, Holywood, County Down, United Kingdom,
BT18 9HQ.
The joint administrators can be reached at:
Clare Boardman
Gavin George Scott Park
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham B4 6AT
HARVEST CLO XXIII: Fitch Affirms 'BB+sf' Rating on Class F Notes
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Fitch Ratings has upgraded Palmer Square European Loan Funding
2021-1 DAC's class B and C, while affirming the rest.
Entity/Debt Rating Prior
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Palmer Square European
Loan Funding 2021-1 DAC
Class A XS2372348719 LT AAAsf Affirmed AAAsf
Class B XS2372348982 LT AAAsf Upgrade AA+sf
Class C XS2372349105 LT AAsf Upgrade A+sf
Class D XS2372349360 LT BBB+sf Affirmed BBB+sf
Class E XS2372349873 LT BB+sf Affirmed BB+sf
Class F XS2372349790 LT BB+sf Affirmed BB+sf
Transaction Summary
Palmer Square European Loan Funding 2021-1 DAC is a cash flow CLO
comprising senior secured obligations. The transaction is static
and the portfolio is serviced by Palmer Square Europe Capital
Management LLC.
KEY RATING DRIVERS
Deleveraging; Increasing Concentration: The upgrades reflects the
transaction's deleveraging combined with manageable near- and
medium-term refinancing risk, with no assets in the portfolio
maturing before 2025, and 7.2% in 2026. The class A notes have
deleveraged EUR111.6 million since the last review in March 2024
and credit enhancement (CE) has increased for all class notes. As
the transaction deleverages, concentration is increasing, and the
portfolio maturity profile is moving closer to the legal final
maturity date of the notes.
The total par loss is 0.6% of target par, due mainly to some
trading losses from the sale of weaker assets. The transaction is
passing all tests except the weighted average life (WAL) test
according to the last trustee report dated January 2025.
Junior Notes More Vulnerable: The class F notes has a limited
default rate cushion against credit quality deterioration, due to
uncertain macroeconomic conditions and increased exposure to assets
on Fitch's market loan concern list (8.1% of the portfolio
balance). In Fitch's opinion, this may lead to further
deterioration of the portfolio with potential credit migration. The
Negative Outlook indicates the potential for a downgrade should
losses erode the default rate cushion.
'B/B-' Portfolio: Fitch assesses the average credit quality of the
obligors at 'B'/'B-'. The Fitch-calculated weighted average rating
factor (WARF) of the current portfolio is 25.8. For the portfolio
including entities with Negative Outlook that are notched down one
level under its criteria, the WARF is 27.
High Recovery Expectations: Senior secured obligations comprise
100% of the portfolio. Fitch views the recovery prospects for these
assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate of the current portfolio under the most recent criteria is
62.5%.
Diversified Portfolio: The portfolio is diversified, with the top
10 obligor concentration at 18%, while the largest obligor accounts
for 1.9% of the portfolio balance. Exposure to the largest
Fitch-defined industry is 13.8%, as calculated by the trustee.
Deviation from MIR: The class C notes' rating is one notch below
their model-implied rating (MIR). The deviation reflects limited
default-rate cushion at the MIR.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher CE and excess spread available to
cover losses in the remaining portfolio.
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 has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
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
Fitch does not provide ESG relevance scores for Palmer Square
European Loan Funding 2021-1 DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
HENLEY CLO II: Fitch Affirms 'B-sf' Rating on Class F-R Notes
-------------------------------------------------------------
Fitch Ratings has upgraded Henley CLO II DAC class B and class D
notes, and affirmed the rest.
Entity/Debt Rating Prior
----------- ------ -----
Henley CLO II DAC
A-R XS2339931821 LT AAAsf Affirmed AAAsf
B-1-R XS2339932712 LT AA+sf Upgrade AAsf
B-2-R XS2339933363 LT AA+sf Upgrade AAsf
C-R XS2339934098 LT Asf Affirmed Asf
D-R XS2339934684 LT BBB+sf Upgrade BBBsf
E-R XS2339935228 LT BBsf Affirmed BBsf
F-R XS2339935145 LT B-sf Affirmed B-sf
Transaction Summary
The transaction is a cash flow CLO mostly comprising senior secured
obligations. It is actively managed by Napier Park Global Capital
and will exit its reinvestment period in January 2026.
KEY RATING DRIVERS
Stable Performance: Since Fitch's last review in March 2024, the
portfolio's performance has remained stable. Based on the last
trustee report dated 16 December 2024, the transaction was passing
all of its collateral-quality and portfolio-profile tests.
The transaction is currently 1.27% below its target par, compared
with 0.94% below target par at the previous review, but remains
below its rating case assumptions. Exposure to assets with a
Fitch-derived rating of 'CCC+' and below is currently 2.3%,
according to the trustee, compared with a limit of 7.5%. The
transaction also currently holds no defaulted assets in the
portfolio.
Large Cushion Supports Stable Outlooks: All notes have large
default-rate buffers to support their ratings and should be capable
of absorbing further defaults in the portfolio. The notes have
sufficient credit protection to withstand potential deterioration
in the credit quality of the portfolio at their rating levels.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The weighted average rating
factor (WARF) of the current portfolio is 26.1, as calculated by
Fitch under its latest criteria.
High Recovery Expectations: Senior secured obligations comprise
99.9% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate (WARR) of the current portfolio is 61.1%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration, as calculated by Fitch, is 13.3%, and no obligor
represents more than 1.5% of the portfolio balance. Exposure to the
three-largest Fitch-defined industries is 35.9% as reported by the
trustee. Fixed-rate assets reported by the trustee are at 2.6% of
the portfolio balance, which compares favourably with a limit of
15%.
Transaction Inside Reinvestment Period: The transaction is in its
reinvestment period until January 2026, and the manager can
reinvest principal proceeds and sale proceeds from credit-improved
obligations and credit-risk obligations, subject to compliance with
the reinvestment criteria. Given the manager's ability to reinvest,
Fitch's analysis is based on a stressed portfolio and tested the
notes' achievable ratings across the Fitch matrix, since the
portfolio can still migrate to different collateral quality tests.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
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 has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
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
Fitch does not provide ESG relevance scores for Henley CLO II DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
HENLEY CLO V: Fitch Affirms 'B-sf' Rating on Class F Notes
----------------------------------------------------------
Fitch Ratings has upgraded Henley CLO V DAC class D notes and
affirmed the rest. The Outlooks are Stable.
Entity/Debt Rating Prior
----------- ------ -----
Henley CLO V DAC
A XS2366718364 LT AAAsf Affirmed AAAsf
B-1 XS2366718521 LT AA+sf Affirmed AA+sf
B-2 XS2366718877 LT AA+sf Affirmed AA+sf
C XS2366719099 LT Asf Affirmed Asf
D XS2366719768 LT BBBsf Upgrade BBB-sf
E XS2366719339 LT BB-sf Affirmed BB-sf
F XS2366719412 LT B-sf Affirmed B-sf
Transaction Summary
Henley CLO V DAC is a cash flow CLO comprising mostly senior
secured obligations. The transaction is actively managed by Napier
Park Global Capital Ltd. and will exit its reinvestment period in
April 2026.
KEY RATING DRIVERS
Stable Performance: Since Fitch's last review in March 2024, the
portfolio's performance has remained stable. Based on the last
trustee report dated 16 December 2024, the transaction was passing
all of its collateral-quality and portfolio-profile tests.
The transaction is currently 1.2% below its target par, but total
par loss remains below its rating-case assumptions. Exposure to
assets with a Fitch-derived rating of 'CCC+' and below is 2.8%, as
calculated by the trustee, versus a limit of 7.5%. The portfolio
has no defaulted assets. This supports the rating actions.
Large Cushion Supports Stable Outlooks: All notes have large
default-rate buffers to support their ratings and should be capable
of absorbing further defaults in the portfolio. The notes have
sufficient credit protection to withstand potential deterioration
in the credit quality of the portfolio at their rating levels.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The weighted average rating
factor (WARF) of the current portfolio is 26.1 as calculated by
Fitch under its latest criteria.
High Recovery Expectations: Senior secured obligations comprise
99.9% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate (WARR) of the current portfolio is 61.2%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration, as calculated by Fitch, is 13.1%, and no obligor
represents more than 1.5% of the portfolio balance. Exposure to the
three-largest Fitch-defined industries is 35.2%, as calculated by
the trustee. Fixed-rate assets reported by the trustee are
currently at 2.4% of the portfolio balance, which compares
favourably with a limit of 15%.
Transaction Inside Reinvestment Period: The transaction is in its
reinvestment period until April 2026, and the manager can reinvest
principal proceeds and sale proceeds from credit-improved
obligations and credit-risk obligations, subject to compliance with
the reinvestment criteria. Given the manager's ability to reinvest,
Fitch's analysis is based on a stressed portfolio and tested the
notes' achievable ratings across the Fitch matrix, since the
portfolio can still migrate to different collateral quality tests.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Downgrades may occur if the build-up of the notes' credit
enhancement following amortisation does not compensate for a larger
loss expectation than initially assumed, due to unexpectedly high
levels of defaults and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio quality and deleveraging,
leading to higher credit enhancement and excess spread available to
cover losses in the remaining portfolio.
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 has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
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
Fitch does not provide ESG relevance scores for Henley CLO V DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
NEWHAVEN CLO: Moody's Cuts EUR9.6MM Class F-R Notes Rating to Caa1
------------------------------------------------------------------
Moody's Ratings has taken a variety of rating actions on the
following notes issued by Newhaven CLO, DAC:
EUR29,050,000 Class B-R Senior Secured Floating Rate Notes due
2034, Upgraded to Aa1 (sf); previously on Apr 9, 2021 Definitive
Rating Assigned Aa2 (sf)
EUR21,700,000 Class C-R Senior Secured Deferrable Floating Rate
Notes due 2034, Upgraded to A1 (sf); previously on Apr 9, 2021
Definitive Rating Assigned A2 (sf)
EUR9,625,000 Class F-R Senior Secured Deferrable Floating Rate
Notes due 2034, Downgraded to Caa1 (sf); previously on Apr 9, 2021
Definitive Rating Assigned B3 (sf)
Moody's have also affirmed the ratings on the following notes:
EUR217,000,000 Class A-R Senior Secured Floating Rate Notes due
2034, Affirmed Aaa (sf); previously on Apr 9, 2021 Definitive
Rating Assigned Aaa (sf)
EUR26,250,000 Class D-R Senior Secured Deferrable Floating Rate
Notes due 2034, Affirmed Baa3 (sf); previously on Apr 9, 2021
Definitive Rating Assigned Baa3 (sf)
EUR21,000,000 Class E-R Senior Secured Deferrable Floating Rate
Notes due 2034, Affirmed Ba3 (sf); previously on Apr 9, 2021
Definitive Rating Assigned Ba3 (sf)
Newhaven CLO, DAC, issued in November 2014 and refinanced in
February 2017 and in April 2021, is a collateralised loan
obligation (CLO) backed by a portfolio of mostly high-yield senior
secured European loans. The portfolio is managed by Bain Capital
Credit, Ltd. The transaction's reinvestment period will end in
February 2025.
RATINGS RATIONALE
The rating upgrades on the Classes B-R and C-R notes are primarily
a result of the benefit of the shorter period of time remaining
before the end of the reinvestment period in February 2025.
In light of reinvestment restrictions during the amortisation
period, and therefore the limited ability to effect significant
changes to the current collateral pool, Moody's analysed the deal
assuming a higher likelihood that the collateral pool
characteristics would maintain an adequate buffer relative to
certain covenant requirements.
The downgrade on the rating on the Class F-R notes is a result of
the deterioration in the credit quality of the underlying
collateral pool and the further deterioration in
over-collateralisation ratios over the last year.
The credit quality has deteriorated as reflected in the
deterioration in the average credit rating of the portfolio
(measured by the weighted average rating factor, or WARF) and a
decrease in the proportion of securities from issuers with ratings
of Caa1 or lower. According to the trustee report dated January
2025 [1], the WARF was 2971, compared with 2873 in January 2024 [2]
report. Securities with ratings of Caa1 or lower currently make up
approximately 6.1% of the underlying portfolio, versus 2.8% in
January 2024.
In addition, the OC of the Class F-R notes further deteriorated
over the last year. According to the trustee report dated January
2025 [1], the Class F-R OC ratio is reported at 104.11% compared to
January 2024 [2] level of 105.28%, respectively.
The affirmations on the ratings on the Class A-R, D-R and E-R 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 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 Moody's published methodology
and could differ from the trustee's reported numbers.
In Moody's base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR334.3m
Defaulted Securities: EUR13.3m
Diversity Score: 63
Weighted Average Rating Factor (WARF): 2978
Weighted Average Life (WAL): 4.47 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.9%
Weighted Average Coupon (WAC): 4.2%
Weighted Average Recovery Rate (WARR): 44.09%
Par haircut in OC tests and interest diversion test: none
The default probability derives from the credit quality of the
collateral pool and Moody's 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 Moody's cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2024.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, using the methodology "Moody's Approach to
Assessing Counterparty Risks in Structured Finance" published in
October 2024. Moody's concluded the ratings of the notes are not
constrained by these risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
-- Portfolio amortisation: Once reaching the end of the
reinvestment period in February 2025, the main source of
uncertainty in this transaction is the pace of amortisation of the
underlying portfolio, which can vary significantly depending on
market conditions and have a significant impact on the notes'
ratings. Amortisation could accelerate as a consequence of high
loan prepayment levels or collateral sales by the collateral
manager or be delayed by an increase in loan amend-and-extend
restructurings. Fast amortisation would usually benefit the ratings
of the notes beginning with the notes having the highest prepayment
priority.
-- Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which could
lengthen as a result of the manager's decision to reinvest in new
issue loans or other loans with longer maturities, or participate
in amend-to-extend offerings. The effect on the ratings of
extending the portfolio's weighted average life can be positive or
negative depending on the notes' seniority.
-- 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
Moody's other analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
PALMER SQUARE 2021-1: Fitch Affirms 'BB+sf' Rating on 2 Tranches
----------------------------------------------------------------
Fitch Ratings has upgraded Palmer Square European Loan Funding
2021-1 DAC's class B and C, while affirming the rest.
Entity/Debt Rating Prior
----------- ------ -----
Palmer Square European
Loan Funding 2021-1 DAC
Class A XS2372348719 LT AAAsf Affirmed AAAsf
Class B XS2372348982 LT AAAsf Upgrade AA+sf
Class C XS2372349105 LT AAsf Upgrade A+sf
Class D XS2372349360 LT BBB+sf Affirmed BBB+sf
Class E XS2372349873 LT BB+sf Affirmed BB+sf
Class F XS2372349790 LT BB+sf Affirmed BB+sf
Transaction Summary
Palmer Square European Loan Funding 2021-1 DAC is a cash flow CLO
comprising senior secured obligations. The transaction is static
and the portfolio is serviced by Palmer Square Europe Capital
Management LLC.
KEY RATING DRIVERS
Deleveraging; Increasing Concentration: The upgrades reflects the
transaction's deleveraging combined with manageable near- and
medium-term refinancing risk, with no assets in the portfolio
maturing before 2025, and 7.2% in 2026. The class A notes have
deleveraged EUR111.6 million since the last review in March 2024
and credit enhancement (CE) has increased for all class notes. As
the transaction deleverages, concentration is increasing, and the
portfolio maturity profile is moving closer to the legal final
maturity date of the notes.
The total par loss is 0.6% of target par, due mainly to some
trading losses from the sale of weaker assets. The transaction is
passing all tests except the weighted average life (WAL) test
according to the last trustee report dated January 2025.
Junior Notes More Vulnerable: The class F notes has a limited
default rate cushion against credit quality deterioration, due to
uncertain macroeconomic conditions and increased exposure to assets
on Fitch's market loan concern list (8.1% of the portfolio
balance). In Fitch's opinion, this may lead to further
deterioration of the portfolio with potential credit migration. The
Negative Outlook indicates the potential for a downgrade should
losses erode the default rate cushion.
'B/B-' Portfolio: Fitch assesses the average credit quality of the
obligors at 'B'/'B-'. The Fitch-calculated weighted average rating
factor (WARF) of the current portfolio is 25.8. For the portfolio
including entities with Negative Outlook that are notched down one
level under its criteria, the WARF is 27.
High Recovery Expectations: Senior secured obligations comprise
100% of the portfolio. Fitch views the recovery prospects for these
assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate of the current portfolio under the most recent criteria is
62.5%.
Diversified Portfolio: The portfolio is diversified, with the top
10 obligor concentration at 18%, while the largest obligor accounts
for 1.9% of the portfolio balance. Exposure to the largest
Fitch-defined industry is 13.8%, as calculated by the trustee.
Deviation from MIR: The class C notes' rating is one notch below
their model-implied rating (MIR). The deviation reflects limited
default-rate cushion at the MIR.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher CE and excess spread available to
cover losses in the remaining portfolio.
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 has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
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
Fitch does not provide ESG relevance scores for Palmer Square
European Loan Funding 2021-1 DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
PALMER SQUARE 2021-2: Fitch Alters Outlook on BB+sf Rating to Neg.
------------------------------------------------------------------
Fitch Ratings has affirmed Palmer Square European Loan Funding
2021-2 DAC's notes, except its class B notes, which have been
upgraded. Fitch has also revised the Outlook to Positive from
Stable on the class C notes and to Negative from Stable on the
class F notes.
Entity/Debt Rating Prior
----------- ------ -----
Palmer Square European
Loan Funding 2021-2 DAC
A XS2397057402 LT AAAsf Affirmed AAAsf
B XS2397058475 LT AAAsf Upgrade AA+sf
C XS2397058129 LT A+sf Affirmed A+sf
D XS2397058632 LT BBB+sf Affirmed BBB+sf
E XS2397058988 LT BBB-sf Affirmed BBB-sf
F XS2397059283 LT BB+sf Affirmed BB+sf
Transaction Summary
Palmer Square European Loan Funding 2021-2 DAC is an arbitrage cash
flow collateralised loan obligation (CLO) that is serviced by
Palmer Square Europe Capital Management LLC. Net proceeds from the
issuance of the notes were used to purchase a static pool of
primarily secured senior loans and bonds, totalling about EUR500
million.
KEY RATING DRIVERS
Deleveraging; Manageable Refinancing Risk: The upgrade and the
Outlook change to Positive reflect the transaction's deleveraging,
combined with manageable near- and medium-term refinancing risk,
with no assets in the portfolio maturing in 2025, and 7.9% in 2026.
The class A notes have deleveraged EUR73 million and accumulated
roughly EUR42 million in cash since the last review in February
2024 and credit enhancement has increased on all class notes. The
transaction is passing all tests, except the weighted average life
(WAL) test, according to the last trustee report dated January
2025.
Junior Notes More Vulnerable: The class F notes have a limited
default rate cushion against credit quality deterioration under
uncertain macroeconomic conditions and increased exposure to assets
on Fitch's market loan concern list (9.8% of the portfolio
balance). This drives the revision on the Outlook to Negative from
Stable.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the obligors at 'B'/'B-'. The Fitch-calculated weighted average
rating factor (WARF) of the current portfolio is 25.2. For the
portfolio including entities with Negative Outlook that are notched
down one level under its criteria, the WARF is 26.9.
High Recovery Expectations: Senior secured obligations comprise
100% of the portfolio. Fitch views the recovery prospects for these
assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate of the current portfolio under the most recent criteria is
64.3%.
Diversified Portfolio: The portfolio is diversified with the top 10
obligor concentration at 14.8%, while the largest obligor is 1.6%
of the portfolio balance. The largest industry in the portfolio is
10.4%, while the top three represent 28% of the portfolio.
Deviation from MIR: The class C notes' ratings are two notches
below their model-implied ratings (MIR) while the class E notes are
one notch above. The class C notes MIR deviation reflects limited
default-rate cushion at the MIR, whereas the class E default-rate
cushion shortfall is s deemed immaterial.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
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 has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
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
Fitch does not provide ESG relevance scores for Palmer Square
European Loan Funding 2021-2 DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
=========
I T A L Y
=========
CEDACRI SPA: Fitch Alters Outlook on 'B' LongTerm IDR to Stable
---------------------------------------------------------------
Fitch Ratings has revised Cedacri S.p.A.'s Outlook to Stable from
Negative, while affirming its Long-Term Issuer Default Rating (IDR)
at 'B'. Fitch has also affirmed its senior secured instrument
rating at 'B' with a Recovery Rating of 'RR4'.
The Outlook revision reflects sufficient visibility to the
improvement of Cedacri's leverage and interest coverage in 2025 to
within their rating sensitivities. Fitch estimates these ratios to
have breached their respective downgrade thresholds at end-2024.
Rating headroom should increase over the medium term, as revenue
growth and profitability improvements lead to a reduction in
leverage and increases in free cash flow (FCF) generation. This is
contingent on certainty over capital allocation policy from its key
shareholder, ION Group.
Cedacri has no leverage headroom for recapitalisation transactions.
While Fitch treats this risk as event risk, were the company to
re-leverage above its sensitivities again, Fitch would likely
include recaps as a base case assumption.
Key Rating Drivers
Leverage Reduction: Fitch estimates that Cedacri's EBITDA leverage
remained above its 6.5x downgrade threshold, even after reducing
significantly to around 7.0x at end-2024 from 8.3x in 2023
following an annual increase in Fitch-defined EBITDA of over 15%.
Fitch expects EBITDA leverage to reduce further to within its
downgrade sensitivity by end-2025, following further growth in
EBITDA. Future deleveraging pace may slow but should still allow
the company to build headroom by 2026.
Improving FCF: Fitch estimates Cedacri's FCF to have been negative
at EUR25 million in 2024, following shareholder distributions,
which Fitch treats as dividends, of a total of EUR73 million. Fitch
expects FCF after dividends as a percentage of revenues to improve
to the low single digits by 2027, subject to dividends distributed
by the company.
Fitch recognises that Cedacri has some discretion on the amount of
shareholder distributions. Its pre-dividend FCF margin was stronger
at 10% in 2024 and Fitch expects it to improve to 13% in 2025 and
2026, which should provide the company with financial flexibility.
Aggressive Financial Policy: Cedacri's high leverage follows its
issue of EUR275 million floating-rate notes (FRN) in 2023 to
finance a EUR150 million shareholder distribution and a EUR50
million tax payment, which increased EBITDA leverage to 8.3x. Fitch
expects ION Group to continue to utilise Cedacri's leverage
capacity in full and distribute to shareholders excess cash flows
generated by the company. Cedacri has also reported inter-company
loans among ION Group companies, which points to an aggressive
financial policy and governance structure.
Strong Deleveraging Since LBO: Cedacri's deleveraging in 2024 was
mainly driven by cost efficiencies realised by ION Group
shareholders. Since the signing of its LBO in 2021 Cedacri has
achieved its target cost savings, with further synergies
identified. Its swift and strong realisation of synergies helped
lift the Fitch-defined EBITDA margin, adjusted for the application
of IFRS16 and capitalised R&D costs, to over 28% in 2024 from 8.9%
in 2020, which is solid for the rating.
Cost-Reduction Plan Nears Completion: Fitch expects Cedacri's scope
for synergy realisation, without affecting the company's operating
profile, to reduce. In its view, the prospect for deleveraging
through increased profitability faces increased execution risks and
potential delays. Leverage should reduce moderately through revenue
growth and greater scale over the medium-to-long term. Cedacri has
around EUR8 million of cost synergies that have been implemented
and to be realised and a further EUR1 million planned for
implementation in 2025.
Strong Revenue Visibility: Most of Cedacri's systems are essential
for its clients. Over 50% of its revenue arises from long-term
contracts, increasingly delivered through a software-as-a service
(SaaS) model, and about three quarters of it are recurring. It has
increased the recurring portion of its revenue to 79% in 2024 from
72% in 2020, and its retention rates remain strong at above 95%.
Cedacri has also increased the average contract length to around
five years, supporting its strong revenue visibility compared with
peers'.
Customer Concentration: The concentration in Cedacri's customer
base, with the top 10 clients accounting for 58% revenue,
significantly exposes the company to the risk of consolidation in
its customer base. However, Cedacri's contracts include short-term
protection against customers cancelling subscriptions and its wide
product portfolio helps retain merging customers in the event of
financial sector consolidation in Italy.
R&D to Support Market Position: Cedacri's leading market position
is continuously supported by its strong investment in R&D to
develop its product offering and remain innovative in digitisation,
cloud solutions, IT security solutions and more. Cedacri's
commitment to investment in R&D weighs on Fitch-defined EBITDA and
EBITDA leverage metrics, but the realisation of these investments
is likely to benefit revenue growth and sustain its market-leading
position.
Derivation Summary
Cedacri compares well with Fitch publicly and privately rated LBO
peers in technology services, like Engineering Ingegneria
Informatica S.p.A. (EII; B/Stable), and peers in ERP technology
including Teamsystem S.p.A (B/Stable) and Unit4 Group Holding B.V.
(B/Stable).
Cedacri's business model is stronger than EII's, with the latter
strongly exposed to the consultancy model but with a less leveraged
capital structure. Compared with Teamsystem and Unit4, Cedacri has
higher leverage, but profitability and pre-dividend FCF generation
are broadly comparable. However, Fitch believes that ERP providers'
diversified customer base has lower business risk, in particular
Teamsystem, which offers a sophisticated full service offering.
Key Assumptions
- Revenue growth of 3%-4% per annum for 2025-2027
- Additional realised cost savings of EUR10 million by 2026, with
low integration costs
- R&D costs of EUR43 million-EUR45 million annually for 2025-2027
treated as operating expense
- Cash impact of working-capital changes remaining neutral to
positive for 2025-2027
- Capex, excluding R&D, at 4% of sales
- Annual shareholder distributions of EUR70 million
Recovery Analysis
Its recovery analysis assumes that Cedacri will be considered a
going concern (GC) in bankruptcy, and that it would be reorganised
rather than liquidated. This is because most of its value lies
within its contract portfolio, incumbent software licenses, and
strong client relationships.
Fitch assumes a 10% administrative claim.
Fitch has updated its assessment of GC EBITDA to EUR100 million
from EUR80 million, consistent with weaker FCF. At this level,
Fitch expects Cedacri to generate zero to slightly positive FCF,
after undertaking corrective measures and the restructuring of its
capital structure.
A financial distress leading to a restructuring may be driven by
Cedacri losing part of its customer base and compromised pricing to
retain clients. In particular, the combination of a wave of mergers
between Italian banks and Cedacri suffering technological
weaknesses within its portfolio may lead to declining revenue and a
contraction in margins. As a result, Cedacri's capital structure
may come under pressure, with the increased cost of debt absorbing
the remaining FCF headroom.
Fitch continues to apply a recovery multiple of 5.5x, in line with
sector peers and around the mid-point of its multiples band for
EMEA. This generates a ranked recovery in the 'RR4' band, after
deducting 10% for administrative claims. This results in a 'B'
instrument rating with a waterfall-generated output percentage at
42% on current metrics and assumptions for the outstanding senior
secured debt.
Its estimates of creditor claims include a fully drawn EUR60
million super-senior revolving credit facility (RCF) and EUR1,030
million senior secured notes (SSNs).
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA leverage above 6.5x on a sustained basis, led by lower
margins and revenue, as well as debt-funded acquisitions or
dividend payments
- Cash flow from operations (CFO) less capex at below 5% of gross
debt
- EBITDA interest below 2.0x
- Consistently negative FCF or a weakening of pre-dividend FCF
margins to below 3%
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA leverage below 5.0x on a sustained basis following revenue
expansion and execution of cost-savings initiatives
- A record of a more conservative financial policy
- CFO less capex above 10% of gross debt
- EBITDA interest coverage above 3.5x on a sustained basis
Liquidity and Debt Structure
Fitch views Cedacri's liquidity as satisfactory. Cash and cash
equivalents were EUR140 million at end-4Q24, while its EUR60
million RCF remained undrawn. Fitch expects the company to
distribute most or all of its excess cash flows to shareholders.
Issuer Profile
Cedacri was incorporated by financial investor and key shareholder
ION Group after its 2021 LBO. Cedacri is a leader in the Italian
software and IT services market for banks.
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
Cedacri has an ESG Relevance Score of '4' for Governance Structure.
This reflects inter-company loans and related-party transactions
among ION Group companies over which Fitch has limited visibility
on its terms and economic substance. This has a negative impact on
the credit profile and is relevant to the ratings 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
----------- ------ -------- -----
Cedacri S.p.A. LT IDR B Affirmed B
senior secured LT B Affirmed RR4 B
EFESTO BIDCO: Moody's Assigns First Time 'B3' Corp. Family Rating
-----------------------------------------------------------------
Moody's Ratings has assigned a B3 long-term corporate family rating
and B3-PD probability of default rating to Efesto Bidco S.p.A.
(Efesto Bidco), a new holding company of the Italian manufacturer
of forged components for the aerospace and industrial markets
Forgital Group. Concurrently, Moody's has assigned a B3 instrument
rating to the proposed EUR760 million equivalent backed senior
secured notes to be issued by Efesto Bidco S.p.A. and co-issued by
Efesto US, LLC. The outlook is positive.
Proceeds from the notes issuance along with an equity injection
will be used to finance the EUR1.5 billion acquisition of Forgital
by Stonepeak from its previous owner Carlyle, to repay existing
debt and to cover transaction fees and expenses. Concurrently,
Moody's has withdrawn the B3 CFR and the B3-PD PDR of F-Brasile
S.p.A., the current holding company of Forgital Group. The ratings
on F-Brasile S.p.A.'s existing backed senior secured notes and
backed senior secured bank credit facilities remain unaffected and
Moody's expect to withdraw them upon repayment and closing of the
acquisition.
RATINGS RATIONALE
The rating action balances the re-leveraging effect of the
contemplated transaction with the strengths of Forgital's business
model as a leading European forged rings manufacturer in a
consolidated market with favorable dynamics in the Aerospace and
Defense end-markets, to which the company is increasingly exposed
(73% of revenue in the last twelve months ending Q3 2024).
Moody's expect that a roughly 50% increase in financial debt
following the secondary LBO will raise the company's Moody's
adjusted gross leverage to around 7.3x (excluding off-balance sheet
factoring, 7.7x including) as of Q3 2024, up from 5.3x prior to the
proposed transaction. Moody's also believe that a higher interest
burden going forward will make generating positive FCF more
difficult. In 2024, the company already struggled with FCF mainly
due to a large outflow for working capital.
However, Moody's think Forgital is well positioned to benefit from
a multi-year demand trend in the A&D industry. The pace of the
post-pandemic recovery has been intense, and Forgital was able to
swiftly de-leverage its balance sheet from 10.9x in December 2022
to around 5x, which Moody's expect to have been reached in December
2024. This level would have exceeded Moody's requirements for a
higher rating category. While Moody's do not expect the same pace
of improvement to continue, Moody's believe that Forgital can
significantly reduce its leverage by growing its earnings at a low
teens rate over the next 12-18 months. Moreover, Moody's think that
with Moody's adjusted gross leverage of around 6.5x – 6.7x
(around 7x including off-balance sheet factoring) under the new
capital structure as of December 2024, the rating is comfortably
positioned in the B3 rating category from the outset.
The rating is mainly supported by (1) the company's market position
as a leading manufacturer of forged aero-engine components in
Europe; (2) good revenue visibility in the Aerospace & Defense
(A&D) segment, underpinned by a EUR4.9 billion backlog as of
September 2024; (3) a greater focus on A&D business, which
diversification in terms of end-markets, programs and materials has
significantly improved over the past five years; (4) additional
diversification through industrial division (c. 27% of sales in LTM
September 2024); and (5) a high level of profitability, with
Moody's adjusted EBITDA margin of over 20% in LTM September 2024.
However, the rating is constrained by (1) Forgital's small size,
with around EUR0.5 billion of revenue (LTM September 2024); (2) its
relative concentration on wide-body programs (around 51% of the
Aerospace sales in LTM September 2024), which, however, has a
larger catchup potential compared to narrow-body; (3) a leveraged
capital structure, especially following the secondary LBO, with
Moody's adjusted gross debt/ EBITDA ratio of around 6.5x – 6.7x
(around 7x including off-balance sheet factoring) and interest
coverage (Moody's adjusted EBITA/ Interest) of just slightly above
1x in December 2024, pro-forma the proposed transaction; (4) the
high energy intensity of the business; and (5) event risk
associated with the private-equity ownership.
A comprehensive review of all credit ratings for the respective
issuer(s) has been conducted during a rating committee.
RATIONALE FOR POSITIVE OUTLOOK
The positive outlook reflects Moody's expectation that Forgital's
profitability will continue to improve, primarily due to favorable
market conditions in the aerospace and defense industry. Moody's
think that its earnings will benefit from reduced energy costs,
attributed to rolling hedges, an increased share of more profitable
aerospace and defense markets in the business mix, operational
leverage, and enhanced plant efficiency. Moody's expect improved
profitability to result in lower leverage, which would pave the way
for a potential rating upgrade over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive rating pressure could arise if:
-- Moody's adjusted gross debt/ EBITDA declines towards 5.5x (6x
including off-balance sheet factoring);
-- Moody's adjusted EBITA/ Interest sustained above 1.5x;
-- Sustainably positive free cash flow generation and good
liquidity.
Conversely, negative rating pressure could arise if:
-- Moody's adjusted gross debt/ EBITDA sustained above 6.5x (7.0x
including off-balance sheet factoring);
-- Moody's adjusted EBITA/ Interest sustained below 1x;
-- Material deterioration in liquidity profile.
LIQUIDITY
The liquidity profile of Efesto Bidco is adequate. This is
reflected in EUR15 million of cash pro-forma the transaction and
the fully available EUR125 million super senior revolving credit
facility (RCF), which matures six months before the notes.
Additionally, the company's liquidity is bolstered by Moody's
projection of modestly positive free cash flow generation over the
next 12-18 months.
The RCF is subject to a springing covenant set at 3.0x super senior
net leverage ratio tested quarterly in case of more than 40%
drawing net of cash on balance sheet.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Governance considerations are relevant for this rating action. This
is reflected in the weight put on Efesto Bidco's financial policy,
given its concentrated ownership by the private equity firm
Stonepeak. As is often the case in private-equity-sponsored deals,
it lacks an independent board of directors and has a high tolerance
for financial leverage.
STRUCTURAL CONSIDERATION
In the loss given default (LGD) assessment for Efesto Bidco S.p.A.,
Moody's rank the proposed EUR760 million equivalent backed senior
secured notes maturing in 2032 behind the EUR125 million super
senior RCF. However, Moody's rate backed senior secured notes at
B3, which is in line with the CFR, because the size of the priority
ranked RCF is not large enough to cause the notching. Both
instruments share the same security package and guarantor coverage
consisting of subsidiaries accounting for around 74% of the group's
consolidated EBITDA.
Moody's ranked trade payables, as well as unsecured lease rejection
claims and pension obligations at the same level as the senior
secured notes and Moody's assumed a standard recovery rate of 50%
due to the covenant lite package consisting of bonds and loans.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Aerospace and
Defense published in December 2024.
COMPANY PROFILE
Headquartered in Vicenza, Italy, Efesto Bidco S.p.A. is an
intermediate holding company of the Forgital Group, a leading
vertically integrated forging company servicing the commercial and
military aerospace industries and various industrial end-markets.
The company operates nine facilities located in Italy, France and
the United States. It is specialized in forging and laminating of
rolled rings using a broad range of materials, including titanium,
nickel and cobalt alloys, carbon steel, alloy steel, stainless
steel and aluminum. Founded in 1873, the company now serves all
major aircraft aero-engine suppliers and customers working in the
oil & gas, transmission, power generation and general mechanics
markets.
In December 2024, a private-equity company Stonepeak entered into a
definitive agreement to acquire Forgital from Carlyle, which has
been its major shareholder since 2019, for a total purchase price
of EUR1.5 billion. In the last twelve months ended September 2024,
Forgital generated approximately EUR492 million of revenue and
employed around 1,100 people worldwide.
===================
L U X E M B O U R G
===================
ODYSSEY EUROPE: S&P Downgrades LT ICR to 'CCC' on Refinancing Risk
------------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Odyssey Europe Holdco S.a r.l. (Odyssey) and its EUR200 million
senior secured notes to 'CCC' and revised its outlook to
developing.
Odyssey, parent of Baltic gaming group Olympic Entertainment
(Olympic), faces heightened refinancing risk since its EUR200
million notes are due in December 2025, meaning the group has less
than 12 months to address this debt maturity.
With about EUR42 million cash on the balance sheet as of
end-November 2024 (and materially the same at end-2024), and no
available committed credit lines, the group lacks sufficient funds
to repay its EUR200 million upcoming debt maturity, weakening the
group's liquidity profile.
Management has indicated that the group has appointed Rothschild &
Co. to launch a private debt process to refinance its notes,
although we understand the process is at an early stage.
The developing outlook indicates that S&P could lower the rating if
the risk of a conventional default or a distressed debt exchange
further rises, or that we could raise the rating if the group
successfully refinances the maturity of its senior secured notes
meaning that we no longer envision a specific default scenario
within the next 12 months.
The EUR200 million notes due in December 2025 became current at
year-end 2024, with less than one year until maturity. Odyssey's
capital structure consists solely of the EUR200 million senior
secured notes due on Dec. 31, 2025. S&P said, "In our view,
maturities of less than 12 months present a material capital
structure risk because the notes became current as of Dec. 31,
2024. In addition, we anticipate a weakening liquidity profile
because we project the group does not have sufficient liquidity
sources to adequately fund its debt maturity, given the absence of
committed credit lines and our estimate of around EUR42 million
cash available on the balance sheet as of Dec. 31, 2024 (broadly in
line with the November 2024 figure)."
S&P said, "Although the group has announced its intention to
refinance the notes, we believe that, in absence of such a
transaction, there is a high likelihood of default or partial loss
for creditors. During its investor call in January 2025, Odyssey
stated that it had hired advisors to facilitate the refinancing of
the upcoming notes. This supports our view of the group's intention
to repay the existing debt; however, we understand that this
process is at an early stage and hence repayment of the notes
depends on the ability to raise sufficient funds. We deem that, in
absence of a successful refinancing process or capital injection
from its shareholders, Odyssey could not repay lenders in full,
reflecting heightened risk that could potentially result in an
event, that we would deem tantamount to default, such as distressed
exchange."
S&P Global Ratings-adjusted leverage is expected to be about 5.0x
in 2024 and 2025 and reported free operating cash flow (FOCF) after
leases to remain positive. In the year to Sept. 30, 2024, Odyssey
saw a 4.5% increase in gaming and other revenue compared with the
previous period, while company-adjusted EBITDA declined by 10% to
EUR30 million because of higher staff costs and gaming tax
increases. S&P said, "We expect revenue of EUR270 million and S&P
Global Ratings-adjusted EBITDA margins to remain stable at 20%-21%
in 2024 and 2025 owing to some recovery in land-based operations
and the continued shift to margin-accretive online business. We
forecast adjusted leverage to reduce somewhat from about 5.2x from
2024. That said, the muted macroeconomic environment and the
group's geographic proximity to Russia could further affect
gambling demand and tourism, particularly in land-based operations.
Overall reported FOCF after leases is expected to remain positive
at about EUR2 million in 2024 and EUR4 million in 2025. Our
forecast does not incorporate the expansion in France and Spain,
where Odyssey has made smaller acquisitions in the last two years
because we do not have clear visibility on the growth ambitions."
S&P said, "The developing outlook reflects indicates that we could
lower the rating if the risk of a conventional default or a
distressed debt exchange further rises, or that we could raise the
rating if the group successfully refinances the maturity of its
senior secured notes meaning that we no longer envision a specific
default scenario within the next 12 months.
"We could lower the rating in the next six months if we thought the
risk of a default event had materially increased or was a virtual
certainty, or if the group announced or agreed a financing
transaction that we viewed as tantamount to default. This could
include a conventional default, liquidity crisis, debt
restructuring, or distressed exchange.
"We could take a positive rating action if the company successfully
refinances the maturity of its senior secured notes, such that we
no longer envision a specific default scenario within the next 12
months; and continues its operating performance in line with our
forecast, including enhancing its liquidity position, such that we
do not envision a default within the subsequent 12 months."
=====================
N E T H E R L A N D S
=====================
ENSTALL GROUP: $375 MM Bank Debt Trades at 18% Discount
-------------------------------------------------------
Participations in a syndicated loan under which Enstall Group BV is
a borrower were trading in the secondary market around 82.5
cents-on-the-dollar during the week ended Friday, January 31, 2025,
according to Bloomberg's Evaluated Pricing service data.
The $375 million Term loan facility is scheduled to mature on
August 30, 2028. About $314.1 million of the loan has been drawn
and outstanding.
Enstall Group B.V. manufactures solar energy equipment. The Company
offers engineered, patented solar mounting products with
industry-leading support and training, Residential, Commercial and
industrial sector. Enstall Group serves customers in the worldwide.
SPRINT BIDCO: EUR700.5MM Bank Debt Trades at 84% Discount
---------------------------------------------------------
Participations in a syndicated loan under which Sprint Bidco BV is
a borrower were trading in the secondary market around 16
cents-on-the-dollar during the week ended Friday, January 31, 2025,
according to Bloomberg's Evaluated Pricing service data.
The EUR700.5 million Term loan facility is scheduled to mature on
June 14, 2029. The amount is fully drawn and outstanding.
Sprint Bidco B.V. is a special purpose vehicle that owns the
Dutch-based bicycle company Accell. The Company’s country of
domicile is the Netherlands.
===========
N O R W A Y
===========
AXACTOR ASA: Moody's Affirms 'B3' CFR, Outlook Remains Negative
---------------------------------------------------------------
Moody's Ratings affirmed Axactor ASA's corporate family rating of
B3 and senior unsecured ratings of Caa2. The issuer outlook remains
negative.
RATINGS RATIONALE
The affirmation of Axactor's CFR at B3 reflects the company's
weakened financial performance in the currently challenging
macroeconomic environment, characterized by reduced collections and
high competition for non-performing loans (NPLs), further
exacerbated by the company's increased cost of funding. The B3 CFR
also reflects Moody's view that Axactor has a high refinancing risk
given its debt maturity concentrations in 2026. The CFR also
incorporates the company's constrained liquidity position and its
limited financial flexibility, given the need to balance its
maturing debt obligations against investments in the franchise.
Axactor's collections dropped to 90% of the previously forecasted
levels in 3Q 2024 from 98% a year ago, and remained at the same
level in October, triggering write-downs of the value of its NPL
portfolio. The company expects the challenging operating
environment to persist into 2025.
While Axactor's cost-cutting measures have partly mitigated the
negative impact of the operating environment on its EBITDA, the
company's leverage remains elevated, while its interest coverage
has deteriorated, driven by increased financing costs.
Positively, Axactor has reduced the risk of a covenant breach under
its bond agreements with the sale of 6% of its NPLs portfolio for
EUR83 million in November 2024 and a subsequent repurchase of
EUR50.9 million of the 2026 bond. The proceeds from the sale will
be added to the company's EBITDA for the next four quarters under
the terms of the bond agreements, alleviating the pressure on the
covenant headroom. However, with the sale, Axactor will also lose
income on the sold portfolio going forward.
Pro-forma for these transactions, Axactor's net leverage ratio
improved to 2.7x from 3.8x as of September 30, 2024, relative to
the covenant threshold of 4.0x. Similarly, the company's interest
coverage improved to 3.9x on a pro-forma basis from 3.0x for the
twelve months ended September 30, 2024, which is also the covenant
level.
Notwithstanding the latest bond repurchase, Axactor has a large
debt maturity concentration in 2026, which presents a refinancing
risk. The company's EUR300 million bond, of which EUR230 million is
currently outstanding following Axactor's repurchases, matures in
September 2026. In addition, the company's EUR545 million revolving
credit facility (RCF), with EUR472 million drawn as of year-end
2024, is due in June 2026.
Axactor's current liquidity position is modest in relation to its
debt obligations. Its cash balance amounted to approximately EUR25
million at September 30, 2024; however, Moody's believe that not
all of it is available for debt repayment or investments, as the
company needs to keep certain amount of cash for operating needs.
The company's limited availability under its RCF further constrains
its financial flexibility. Axactor's EUR545 million credit facility
was 87% drawn at year-end 2024, leaving EUR73 million available for
borrowing.
The senior unsecured debt rating of Caa2 of Axactor's bonds
reflects their priorities of claims and asset coverage in the
company's capital structure. The size of the company's senior
secured RCF relative to the amount of senior unsecured bonds
indicates higher loss given default for senior unsecured creditors,
leading to a two-notch differential with the CFR.
OUTLOOK
The negative outlook reflects the refinancing risk presented by
Axactor's debt maturities in 2026, further heightened by its
weakened financial performance in the presently challenging
economic environment.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade is unlikely given the negative outlook. The
outlook could return to stable if Axactor's financial performance
strengthens, as evidenced by improved collections and cash flows,
and if the company renews its RCF and refinances its 2026 bond at
least one year prior to their maturities.
Axactor's ratings could be downgraded if the company does not renew
its RCF due in June 2026 and if it does not refinance its September
2026 bond at least one year prior to their maturities. Moody's
could also downgrade Axactor's ratings if its collections and cash
flows do not improve, resulting in higher leverage and reduced
interest coverage, and additionally, if the company's franchise is
eroded by diminished investments, meaningfully below the
replacement rate, or substantial portfolio sales.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Finance
Companies published in July 2024.
=========
S P A I N
=========
KRONOSNET CX: EUR858.8MM Bank Debt Trades at 17% Discount
---------------------------------------------------------
Participations in a syndicated loan under which Kronosnet CX Bidco
2022 SL is a borrower were trading in the secondary market around
83.1 cents-on-the-dollar during the week ended Friday, January 31,
2025, according to Bloomberg's Evaluated Pricing service data.
The EUR858.8 million Term loan facility is scheduled to mature on
October 25, 2029. The amount is fully drawn and outstanding.
Kronosnet CX Bidco 2022 SL operates as a special purpose entity.
The Company was formed for the purpose of issuing debt securities
to repay existing credit facilities, refinance indebtedness, and
for acquisition purposes. The Company's country of domicile is
Spain.
LA CASTILLEJA: EUR28.8MM Bank Debt Trades at 19% Discount
---------------------------------------------------------
Participations in a syndicated loan under which La Castilleja
Energia SL is a borrower were trading in the secondary market
around 81.1 cents-on-the-dollar during the week ended Friday,
January 31, 2025, according to Bloomberg's Evaluated Pricing
service data.
The EUR28.8 million Term loan facility is scheduled to mature on
December 31, 2034. The amount is fully drawn and outstanding.
La Castilleja Energia SL provides utility services. The Company
offers electricity generation, transmission, and distribution
services.
===========
T U R K E Y
===========
ISTANBUL TAKAS: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed Istanbul Takas ve Saklama Bankasi A.S.'s
(Takasbank) Long-Term Foreign-Currency (FC) and Local-Currency (LC)
Issuer Default Ratings (IDRs) at 'BB-' and National Long-Term
Rating at 'AAA(tur)'. Fitch has also upgraded Takasbank's Viability
Rating (VR) to 'b+' from 'b'.
The Outlooks on the Long-Term IDRs and National Long-Term Rating
are Stable.
Key Rating Drivers
Government Support Drives IDRs: Takasbank's Long-Term IDRs and
Government Support Rating (GSR) reflect Fitch's view of expected
support from the Turkish sovereign. The Stable Outlook mirrors that
on the sovereign. The 'AAA(tur)' National Long-Term Rating reflects
Fitch's view of Takasbank's strong creditworthiness relative to
other domestic issuers.
Fitch has also assigned Takasbank FC and LC Long-Term IDR
ex-government support or 'xgs' ratings of 'B+(xgs)'. The
ex-government support ratings exclude assumptions of extraordinary
government support from the underlying ratings. Fitch has also
assigned Short-Term FC and LC IDRs at 'B(xgs)' in accordance with
Fitch's short-term rating mapping.
Systemically Important Turkish Clearing House: Takasbank's GSR is
higher than commercial systemically important domestic banks. This
is because, in its opinion, Takasbank has exceptionally high
systemic importance for the Turkish financial sector. Contagion
risk from Takasbank's default would be significant, given the
bank's inter-connectedness with the wider Turkish financial sector
as Turkiye's only central counterparty clearing house (CCP). Fitch
believes that, even in quite extreme scenarios, Takasbank's foreign
currency support needs should be manageable for the sovereign,
given the bank's adequate liquidity position and very short-term
assets.
Concentrated Exposures Weigh on VR: Takasbank's counterparty and
market risks in its core clearing activities are well managed and
separate, supporting a VR at the same level as the operating
environment score for large Turkish banks. However, Takasbank's
liquidity placements are concentrated, making it sensitive to a
deterioration in commercial banks' credit quality.
Turkiye's major state banks are consistently the largest
counterparties in Takasbank's liquidity placements. Positively,
Takasbank's has reduced its non-clearing related interbank
activities in recent years, but its concentrated credit exposure to
Turkiye's largest banks continue to constrain its VR.
Dominant Local Franchise: Takasbank's VR is underpinned by the
bank's dominant franchise as the country's only clearing house.
Despite its small size by international standards, Takasbank's VR
is supported by sound counterparty risk management, limited direct
credit risk in its CCP activities, low market risk and a liquid
balance sheet.
Strong Core Profitability: Takasbank's substantial liquidity
placements lead to materially larger net interest income as a share
of revenue than at many other CCPs. Core business revenues are
strong and comfortably cover operating expenses, indicating a
self-sufficient business profile, even without interest income from
bank placements and securities. Growth and profitability indicators
are distorted by the high inflation in Turkiye, but Fitch expects
core profitability to remain strong in 2025 and 2026.
Adequate Capitalisation: Takasbank is subject to Banking Regulation
and Supervision Agency capital requirements, and Fitch uses its
"Bank Criteria" as a complementary criterion to assess the bank's
capitalisation. Its core capital ratio was sound at 24.1% at the
end of 9M24, and comfortably above the regulatory minimum. Fitch
believes the regulator would provide forbearance should the need
arise to protect the payment and clearance infrastructure in the
country.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A downgrade of Turkiye's sovereign rating would be mirrored in
Takasbank's IDRs.
Deterioration in the sovereign's propensity to provide support, due
to an adverse change in Takasbank's systemic importance or reduced
government ownership through privatisation, would be reflected in
its GSR, IDRs and National Rating.
A material operational loss, a materially increased risk appetite,
or substantial deterioration in the credit profiles of Takasbank's
main commercial bank counterparties would strain Takasbank's VR.
Long-Term IDR (xgs) ratings are sensitive to changes in Takasbank's
VR. The bank's Short-Term IDR (xgs) ratings are primarily sensitive
to a change in their Long-Term IDR (xgs) and could be downgraded if
the latter are downgraded, and map to a lower short-term rating in
accordance with Fitch's criteria.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Positive action on Turkiye's sovereign rating would be mirrored in
Takasbank's IDRs.
A broader improvement in Fitch's assessment of the operating
environment in Turkiye, along with a continued improvement in
Takasbank's key counterparty credit risks and unchanged or
improving financial-profile metrics, could lead to an upgrade of
Takasbank's VR.
ADJUSTMENTS
The Sector Risk Operating Environment score has been assigned below
the implied score due to the following adjustment reason(s):
Macroeconomic stability (negative), Sovereign rating (negative).
The Earnings & Profitability score has been assigned below the
implied score due to the following adjustment reason(s): Portfolio
risk (negative). The Capitalisation & Leverage score has been
assigned below the implied score due to the following adjustment
reason(s): Risk profile and business model (negative). The Funding,
Liquidity & Coverage score has been assigned below the implied
score due to the following adjustment reason(s): Business
model/funding market convention (negative).
ESG Considerations
Takasbank has an ESG Relevance Score of '4' for Governance
Structure due to government influence over the board's strategy and
governance, which has a negative impact on the credit profile, and
is relevant to the ratings 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.
123456789012345678901234567890123456789012345678901234567890123456
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Istanbul Takas ve
Saklama Bankasi A.S.
LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Natl LT AAA(tur) Affirmed AAA(tur)
Viability b+ Upgrade b
Gov't Support bb- Affirmed bb-
LT IDR (xgs) B+(xgs) New Rating
ST IDR (xgs) B(xgs) New Rating
LC LT IDR (xgs) B+(xgs) New Rating
LC ST IDR (xgs) B(xgs) New Rating
===========================
U N I T E D K I N G D O M
===========================
CLARA.NET HOLDINGS: GBP110.2MM Bank Debt Trades at 18% Discount
---------------------------------------------------------------
Participations in a syndicated loan under which Clara.Net Holdings
Ltd is a borrower were trading in the secondary market around 82.4
cents-on-the-dollar during the week ended Friday, January 31, 2025,
according to Bloomberg's Evaluated Pricing service data.
The GBP110.2 million Term loan facility is scheduled to mature on
July 10, 2028. The amount is fully drawn and outstanding.
Claranet is a medium-sized provider of managed IT services
primarily focusing on cloud-related services for small and
medium-sized companies and the sub-enterprise customer segment. It
also offers cybersecurity, connectivity and workplace solutions.
The Company's country of domicile is the United Kingdom.
HALO (APPLEDORE): Teneo Financial Named as Administrators
---------------------------------------------------------
Halo (Appledore) Realisations Limited, fka Harland and Wolff
(Appledore) Limited, was placed into administration proceedings in
the High Court of Justice Business and Property Courts of England
and Wales, Insolvency and Companies List, Court Number:
CR-2025-000236, and Clare Boardman and Gavin George Scott Park of
Teneo Financial Advisory Limited were appointed as administrators
on Jan. 27, 2025.
Halo (Appledore), trading as Harland & Wolff, engages in
manufacturing.
Its registered office is at Fieldfisher Riverbank House, 2 Swan
Lane, London, EC4R 3TT. Its principal trading address is at Bidna
Yd, Wooda Rd, Appledore, Northam, Bideford, EX39 1UZ.
The joint administrators can be reached at:
Clare Boardman
Gavin George Scott Park
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham, B4 6AT
For further details, contact:
The Joint Administrators
Tel No: 0121 619 0120
Email: Halocreditors@teneo.com
HALO (ARNISH): Teneo Financial Named as Administrators
------------------------------------------------------
Halo (Arnish) Realisations Limited, trading as Harland & Wolff, was
placed into administration proceedings in the High Court of Justice
Business and Property Courts of England and Wales, Insolvency and
Companies List, Court Number: CR-2025-000235, and Clare Boardman
and Gavin George Scott Park of Teneo Financial Advisory Limited
were appointed as administrators on Jan. 27, 2025.
Halo (Arnish) Realisations, trading as Harland & Wolff, is into
manufacturing.
Its registered office is at Fieldfisher Riverbank House, 2 Swan
Lane, London, EC4R 3TT.
Its principal trading address is at Arnish Point Industrial
Estate, Arnish HS2 9J.
The joint administrators can be reached at:
Clare Boardman
Gavin George Scott Park
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham, B4 6AT
For further details, contact:
The Joint Administrators
Tel No: 0121 619 0120
Email: Halocreditors@teneo.com
HALO (HOLDINGS): Teneo Financial Named as Administrators
--------------------------------------------------------
Halo (Holdings) Realisations Limited, fka Harland & Wolff Holdings
Limited, was placed into administration proceedings in the High
Court of Justice Business and Property Courts of England and Wales,
Insolvency and Companies List, Court Number: CR-2025-000237, and
Clare Boardman and Gavin George Scott Park of Teneo Financial
Advisory Limited were appointed as administrators on Jan. 27, 2025.
Halo (Holdings), trading as Harland & Wolff, is a holding company.
Its registered office is at Fieldfisher Riverbank House, 2 Swan
Lane, London, EC4R 3TT
The joint administrators can be reached at:
Clare Boardman (IP No. 012730)
Gavin George Scott Park
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham, B4 6AT
For further details, contact:
The Joint Administrators
Tel No: 0121 619 0120
Email: Halocreditors@teneo.com
HALO (METHIL): Teneo Financial Named as Administrators
------------------------------------------------------
Halo (Methil) Realisations Limited, fka Harland and Wolff (Methil)
Limited, was placed into administration proceedings in the High
Court of Justice Business and Property Courts of England and Wales,
Insolvency and Companies List, Court Number: CR-2025-000234, and
Clare Boardman and Gavin George Scott Park of Teneo Financial
Advisory Limited` were appointed as administrators on Jan. 27,
2025.
Halo (Methil), trading as Harland & Wolff, is into engineering
activities. Its registered office is at Fieldfisher Riverbank
House, 2 Swan Lane, London, EC4R 3TT. Its principal trading
address is at Wellesley Rd, Methil, Leven, KY8 3RA.
The joint administrators can be reached at:
Clare Boardman
Gavin George Scott Park
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham, B4 6AT
For further details, contact:
The Joint Administrators
Tel No: 0121 619 0120
Email: Halocreditors@teneo.com
HALO (PEOPLE & SKILLS): Teneo Financial Named as Administrators
---------------------------------------------------------------
Halo (People & Skills) Realisations Limited, fka Harland and Wolff
(People & Skills) Limited, was placed into administration
proceedings in the High Court of Justice Business and Property
Courts of England and Wales, Insolvency and Companies List, Court
Number: CR-2025-000238, and Clare Boardman and Gavin George Scott
Park of Teneo Financial Advisory Limited were appointed as
administrators on Jan. 27, 2025.
Halo (People & Skills) engages in recruitment. Its registered
office is at Fieldfisher Riverbank House, 2 Swan Lane, London, EC4R
3TT.
The joint administrators can be reached at:
Clare Boardman
Gavin George Scott Park
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham, B4 6AT
For further details, contact:
The Joint Administrators
Tel No: 0121-619-0120
Email: Halocreditors@teneo.com
HOSPITAL COMPANY: Moody's Cuts Rating on GBP152MM Sec. Bonds to Ba1
-------------------------------------------------------------------
Moody's Ratings has downgraded to Ba1 from Baa1 the underlying
rating on The Hospital Company (Dartford) Issuer Plc's (the Issuer)
GBP152.5 million index-linked senior secured bonds due 2031. The
outlook remains negative.
No rating action is taken on the A1 backed senior secured rating,
as this is derived from the financial guarantee provided by Assured
Guaranty UK limited (AGUK, A1 stable).
The Issuer is the financing vehicle for The Hospital Company
(Dartford) Limited (ProjectCo).
RATINGS RATIONALE
The rating action reflects the recent formal update of estimated
costs for outstanding estate remedial works, which ProjectCo must
implement as part of a Settlement and Amendment Deed (the S&AD)
agreed in 2021. Expenditures related to remediation of cladding,
fire safety and site condition defects have increased significantly
post completion of site wide surveys and current estimates are a
multiple of the previously disclosed GBP3.6 million related to
cladding. Following this unexpected revision, the greatly increased
remedial costs will materially weigh on ProjectCo's financial
profile, significantly reducing flexibility to absorb further
stress or cost revisions.
As part of the rating action, ProjectCo's Governance Issuer Profile
Score and Credit Impact Score have been changed to G-4 and CIS-4
respectively, indicating that governance considerations have a
negative impact on the rating. Whilst acknowledging that revised
estimates reflect a progressive refinement and understanding of the
full extent of remedial measures required, the sharp upward
revision in remedial cost estimates reflects negatively on
ProjectCo's management credibility and track record. At the same
time, continued delays in the finalisation and publication of
audited accounts for the year 2024 weigh on Moody's assessment of
compliance and reporting. For additional details, please refer to
Moody's General Principles for Assessing Environmental, Social and
Governance Risks Methodology.
In November 2021, ProjectCo and the Dartford and Gravesham NHS
Trust (the Trust) signed a S&AD which, whilst resolving some Trust
claims about historical performance, required ProjectCo to procure
cladding, fire safety and site condition surveys. Finalisation of
these surveys has resulted in a significant upward revision of
estimated remedial costs compared to previous indications.
According to the S&AD, ProjectCo must complete the identified
remedial works within a stipulated timeframe (which may be extended
for certain delay events, for example arising from access
restrictions). Moody's understand that the Trust claims that such
relief periods have now expired. As such, since August 2024, the
Trust has levied deductions of approximately GBP80,000 per month
but these are subject to discussions. In particular, the Trust and
ProjectCo are seeking to agree an appropriate rectification works
programme (as required pursuant to the S&AD), in addition to wider
commercial claims, in order to finalise a settlement position in
relation to the alleged deduction claims from the Trust. Regular
meetings have been held to progress on the finalisation of a
standstill agreement allowing such claims to be formally suspended
until September 2025, at which point the parties are aiming to
enter into a new settlement agreement.
The magnitude and extent of required remedial works will
significantly weigh on ProjectCo's financial profile. Moody's
estimate the costs will result in a Moody's calculated minimum and
average DSCRs of 0.78x (occurring in October 2026) and 1.05x,
respectively. Under the Issuer's base case, minimum and average
covenant DSCRs would be 1.05x and 1.09x, respectively.
ProjectCo currently expects debt service to be paid without any
reliance on the debt service reserve account but Moody's note that
flexibility to absorb any additional potential cost revision is
very limited. ProjectCo's mandatory reserves are currently fully
funded. From the second half of 2021, ProjectCo started to forgo
dividend payments and build additional cash balances. Following
agreement with AGUK, this additional liquidity has been swept to
fund an additional debt service reserve which is expected to be
used to smooth DSCRs, ensuring positioning above covenant default
levels (i.e. 1.05x DSCR) while the bulk of remedial works is
finalised and provide, according to current expectations, a further
six-month debt service coverage until approximately the April 2027
payment date. Shareholders have also committed to provide GBP3
million through subordinated loans to support funding of remedial
works, but no further contributions are envisaged.
More generally, the Ba1 underlying rating continues to reflect as
positives (1) ProjectCo's long-term private finance initiative
project agreement (PA) with the Trust to build, finance, maintain
and provide facilities management (FM) services to the Darent
Valley Hospital; (2) the predictable and stable revenue stream
under the PA; (3) a generally satisfactory operating performance of
the hospital following the finalisation of the S&DA, which
clarified performance standards; (4) the removal of soft FM
services, which simplified ProjectCo's operational obligations; (5)
the fact that P2G LLP, an independent third-party consultancy, has
formally left the project, which is expected to reduce the risk of
frictions between parties as ongoing discussions proceed and
outstanding defects are remedied; and (6) creditor protections
included within the financing structure.
The Ba1 underlying rating also reflects the following credit
weaknesses (1) a weak and leveraged financial profile, which
reduces flexibility to absorb unexpected stress or further
revisions of expenditures; (2) the magnitude and complexity of
remedial works required, which could further pressure on the
Project's financial and liquidity position; and (3) the risk linked
to the expiry of relief periods related to remedial works and the
potential to incur additional material financial deductions and
performance score reductions.
A comprehensive review of all credit ratings for the respective
issuer(s) has been conducted during a rating committee.
RATIONALE FOR NEGATIVE OUTLOOK
The negative outlook reflects the magnitude and complexity of
remedial measures which ProjectCo must deliver. Any increase in
costs would further weigh on ProjectCo's financial and liquidity
position when flexibility to absorb additional stress is very
limited.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the negative outlook, as well as the extent and complexity of
planned remedial works, upward rating pressure is currently not
envisaged.
The rating could be downgraded if (1) required cladding, fire
safety and site condition remedial works are more significant,
costly or complex than currently estimated; (2) ProjectCo
experiences difficulties or delays in delivering remedial works and
this leads to increased risk of financial deductions and
performance score reductions; (3) increased tensions negatively
impact relationships between project parties; (4) the finalisation
of the standstill agreement and, in turn, settlement agreement
currently under discussion between ProjectCo and the Trust is
delayed; and (5) it appears likely that the Issuer will need to
rely on mandatory maintenance and debt service reserves to fund its
liquidity needs.
The principal methodology used in this rating was Operational
Privately Financed Public Infrastructure (PFI/PPP/P3) Projects
Methodology published in March 2023.
KANTAR GLOBAL: S&P Affirms 'B-' ICR & Alters Outlook to Positive
----------------------------------------------------------------
S&P Global Ratings revised its outlook on Kantar Global Holdings to
positive from stable and affirmed its 'B-' long-term issuer credit
rating on the company. S&P also affirmed its 'B-' issue ratings on
Kantar's existing debt and assigned its 'B-' issue rating and '3'
recovery rating to the new senior secured notes.
S&P said, "The positive outlook reflects that we could raise our
rating on Kantar in the next 12 months if the group performs in
line with our base-case scenario, resulting in sustainably positive
FOCF and steady deleveraging, with debt to EBITDA of about 7x in
2025.
"The outlook revision reflects the favorable momentum in operations
alongside our expectation that adjusted debt to EBITDA and FOCF
will improve in the next 12-24 months. We expect adjusted debt to
EBITDA to improve to about 7.2x by the end of 2025 from 8.2x at
end-2024, driven largely by improved earnings and debt reduction
using proceeds from asset sales. At the same time, we estimate that
Kantar achieved break-even FOCF following material outflows in the
previous three years, fueled by improved profitability and
streamlined net working capital. The group has largely completed
its significant transformation and restructuring initiatives, and
restructuring costs have decreased. We expect earnings will grow
steadily. We estimate Kantar's EBITDA margin expanded to about 20%
in 2024 from about an average of 13% over 2021-2023, and we expect
it will improve further to 21%-23% by 2025-2026. Since the
carve-out from WPP in 2019, Kantar has incurred large restructuring
costs related to investments in technology and severance, alongside
acquisition- and disposal-related costs, all of which subdued free
cash flow. Kantar also had a substantial working capital outflow in
2023 related to a number of factors, including the unwind of
exceptional costs in creditors and the temporary impact of
offshoring billings to Portugal and India, which resulted in
materially negative FOCF of $277 million in 2023. Given that most
of these multiyear projects have now been completed, we expect
restructuring costs and working capital outflows to materially
decrease in the next two years, leading to sustainably positive
FOCF.
"Once complete, we do not expect the sale of Kantar's media
division will affect the rating. On Jan. 20, 2025, Kantar announced
the sale of Kantar Media to HIG Capital for $1 billion, a
significant portion of which will be cash proceeds. We expect the
transaction will complete second-half 2025 and that the company
will use the majority of proceeds to repay debt, leading to a
largely neutral impact on adjusted leverage. In our view, the sale
will reduce the scale and diversity of Kantar's business because
Kantar Media contributed about 14% of total gross revenue. This
division was more stable and predictable compared with the rest of
Kantar's portfolio thanks to the long-term nature of its contracts
with clients. Nevertheless, the planned debt repayment will
decrease the company's cash interest payments and improve free cash
flow conversion.
"Kantar's organic revenue growth should accelerate in the next
12-24 months. We expect 3%-5% revenue growth in 2025 supported by
continued strong growth in the newly combined Numerator and
Worldpanel division, and improved growth in Insights, Kantar's
largest division. In 2024, Insights faced muted growth due to lower
spending by its largest technology clients. However, with the
macroeconomic improvement and easing inflation, we anticipate tech
sector spending to rebound in 2025, resulting in 3% growth for this
division. We expect continued strong growth in the Numerator
division of about 7%, reflecting a significant increase in clients
in the North American consumer packed goods (CPG) market.
Additionally, we forecast an increase of 7% in the Worldpanel
segment due to increased demand for behavioral data alongside the
rollout of the MyWorldPanel platform in multiple regions. We expect
Kantar to maintain its strong position in global market research,
coupled with its high recurring revenue and long-lasting
relationships with clients.
"The proposed refinancing will be largely credit leverage neutral,
but it extends the debt maturity profile which we view favorably.
Kantar plans to issue new senior secured debt of $1.88 billion. It
will use the proceeds to redeem the existing $1.54 billion senior
secured notes due in 2026, the $99 million portion of term loan B
due in 2026, repay the revolving credit facility (RCF), and fund
some earn-out payments. We estimate the interest costs will
increase only marginally following the refinancing and overall, we
do not expect any impact on Kantar's credit measures. The extension
of debt maturities will be credit positive, with the nearest
maturity of $428 million senior unsecured notes due in October
2027, which represents a small fraction of the total debt.
"The positive outlook reflects that we could raise our rating on
Kantar in the next 12 months if the group performs in line with our
base-case scenario, resulting in sustainably positive FOCF and
steady deleveraging.
"We could revise our outlook to stable if adjusted leverage fails
to improve toward 7x and FOCF remains only break-even or reverts to
negative, due to weaker revenue growth and earnings, for example
from the inability to reduce one-off costs, or if Kantar faces
higher working capital outflows that erode FOCF. If following the
sale of Kantar Media, Kantar didn't use proceeds for debt reduction
as is currently planned, this could also lead to higher leverage.
"We could raise our rating on Kantar if its profitability improved
in line with our base-case scenario, with adjusted leverage fell to
about 7x sustainably; and it generated positive cash flow, with
FOCF to debt approaching 5%."
KCA DEUTAG: S&P Withdraws 'B' LongTerm Issuer Credit Rating
-----------------------------------------------------------
S&P Global Ratings withdrew its 'B' long-term issuer credit rating
on KCA Deutag Alpha Ltd. at the issuer's request. The withdrawal
followed its acquisition by U.S.-based Helmerich & Payne Inc. in
January 2025. At the time of the withdrawal the rating was on
CreditWatch positive.
LOTTIE LONDON: FRP Advisory Named as Administrators
---------------------------------------------------
Lottie London Holdings Ltd was placed into administration
proceedings in the The High Court of Justice Business & Property
Courts in England and Wales, Court Number: CR-2025-000119, and
Geoffrey Paul Rowley and Anthony Wright of FRP Advisory Trading
Limited were appointed as administrators on Jan. 22, 2025.
Lottie London, fka PBS Brand Agency Limited, engages in the retail
sale of cosmetic and toilet articles in specialized stores.
Its registered office is at Trinity Court c/o Mercer & Hole, at
Church Street, Rickmansworth, WD3 1RT to be changed to c/o FRP
Advisory Trading Limited, at 2nd Floor, 110 Cannon Street, London,
EC4N 6EU.
The joint administrators can be reached at:
Geoffrey Paul Rowley
Anthony Wright
FRP Advisory Trading Limited
2nd Floor, 110 Cannon Street
London, EC4N 6EU
For further details, contact:
The Joint Administrators
Tel: 020 3005 4000
Alternative contact:
Jacob Kench
Email: cp.london@frpadvisory.com
M6 CARPETS: Leonard Curtis Named as Administrators
--------------------------------------------------
M6 Carpets Haydock Limited was placed into administration
proceedings in The High Court of Justice Business and Property
Courts in Manchester, Insolvency & Companies List (ChD), Court
Number: CR-2025-000090, and Mike Dillon and Hilary Pascoe of
Leonard Curtis were appointed as administrators on Jan. 28, 2025.
M6 Carpets Haydock is a carpet retailer company. Its registered
office and trading address is Unit 3 Pye Close, Penny Lane,
Haydock, Merseyside WA11 9SJ.
The joint administrators can be reached at:
Mike Dillon
Hilary Pascoe
Leonard Curtis
Riverside House
Irwell Street
Manchester, M3 5EN
For further details, contact:
The Joint Administrators
Tel No: 0161-831-9999
Email: recovery@leonardcurtis.co.uk
Alternative contact: Sidhra Qadoos
MORLEY GPCO: FRP Advisory Named as Administrators
-------------------------------------------------
Morley GPCO Limited was placed into administration proceedings in
the The High Court of Justice Court Number: CR-2025-000154, and
Ian James Corfield and Simon Baggs of FRP Advisory Trading Limited
were appointed as administrators on Jan. 21, 2025.
Morley GPCO is a holding company.
Its registered office is at Regent House, Theobald Street,
Borehamwood, WD6 4RS to be changed to Floor 2, 110 Cannon Street,
London, EC4N 6EU
Its principal trading address is at Regent House, Theobald Street,
Borehamwood, WD6 4RS
The joint administrators can be reached at:
Ian James Corfield
Simon Baggs (IP No. 29950)
FRP Advisory Trading Limited
110 Cannon Street
London EC4N 6EU
For further details, contact:
The Joint Administrators
Tel No: 020 3005 4000
Alternative contact:
Lawrence Cormack
Email: lawrence.cormack@frpadvisory.com
MORLEY NOMINEE: FRP Advisory Named as Administrators
----------------------------------------------------
Morley Nominee Co Limited was placed into administration
proceedings in the The High Court of Justice, Court Number:
CR-2025-000155, and Ian James Corfield and Simon Baggs of FRP
Advisory Trading Limited were appointed as administrators on Jan.
21, 2025.
Morley Nominee is a holding company.
Its registered office is at Regent House, Theobald Street,
Borehamwood, WD6 4RS to be changed to Floor 2, 110 Cannon Street,
London, EC4N 6EU.
Its principal trading address is at Regent House, Theobald Street,
Borehamwood, WD6 4RS.
The joint administrators can be reached at:
Ian James Corfield
Simon Baggs
FRP Advisory Trading Limited
2nd Floor, 110 Cannon Street
London, EC4N 6EU
Further details, contact:
The Joint Administrators
Tel: 020 3005 4000
Alternative contact:
Lawrence Cormack
Email: lawrence.cormack@frpadvisory.com
SMARTPA GLOBAL: FRP Advisory Named as Administrators
----------------------------------------------------
Smartpa Global Ltd was placed into administration proceedings in in
the Court of Session, No P68 of 2025, and Michelle Elliot and
Callum Angus Carmichael of FRP Advisory Trading Limited were
appointed as administrators on Jan. 29, 2025.
Smartpa Global engages in combined office administrative service
activities.
Its registered office is at 7-13 Dublin Street Lane South,
Edinburgh, EH1 3PX -- to be changed to FRP Advisory Trading
Limited, at Level 2, The Beacon, 176 St Vincent Street, Glasgow, G2
5SG.
Its principal trading address is at 7-13 Dublin Street Lane South,
Edinburgh, EH1 3PX.
The joint administrators can be reached at:
Michelle Elliot
Callum Angus Carmichael
FRP Advisory Trading Limited
Level 2, The Beacon
176 St Vincent Street
Glasgow G2 5S
For further details, contact:
The Joint Administrators
Tel No: 0330-055-5455
Alternative contact:
Abbie Reid
Email: cp.glasgow@frpadvisory.com
SYNTHOMER PLC: S&P Lowers ICR to 'B+' on Sustained High Leverage
----------------------------------------------------------------
S&P Global Ratings lowered to 'B+' from 'BB-' its ratings on
chemical manufacturer Synthomer PLC and its debt. The recovery
rating on the debt remains at '3', reflecting its expectation of
meaningful recovery prospects (65% rounded estimate).
The stable outlook reflects S&P's base-case expectation that
Synthomer's adjusted debt to EBITDA will reduce to about 5.4x-5.7x
in 2025 and about 4.0x in 2026, and that the company will generate
healthy positive free operating cash flow (FOCF) in 2026.
S&P said, "We anticipate muted recovery in demand for chemicals in
2025 despite completed destocking. In the broader sector, we
believe that volume growth in 2025 will be modest--albeit improved
from 2024--as chemical players and their customers grapple with
cautious business and consumer sentiment; uncertainty of the scope,
impact, and severity of trade tariffs; and the broader
macroeconomic and geopolitical outlook. In this context, we
forecast that as in 2024, Synthomer's EBITDA growth will be driven
primarily by the company's progress in cost saving and its asset
reliability improvement program, backed by its strategic focus to
reposition the portfolio toward specialty chemicals.
"We forecast that Synthomer's adjusted EBITDA will strengthen to
GBP155 million-GBP165 million in 2025 from GBP135 million-GBP138
million estimated for 2024. That said, while improved, 2025
adjusted EBITDA will remain below the GBP210 million-GBP220 million
we expected previously. As such, we anticipate that Synthomer's
adjusted debt to EBITDA will not recover to the 'BB-'
rating-commensurate threshold of below 5.0x this year. In
estimating adjusted debt for 2024, we added to about GBP850 million
of financial debt about GBP60 million of pension liabilities (net
of tax), GBP55 million of lease liabilities, and about GBP80
million-GBP85 million of factoring liabilities. We deducted about
GBP218 million of unrestricted cash.
"Our margin improvement and deleveraging forecast in 2025-2026 is
primarily driven by Synthomer's self-help initiatives, with only
modest support from market recovery. The uplift should be generated
by the GBP30 million-GBP40 million procurement savings program and
GBP25 million savings from the Adhesive Solutions business'
performance improvement program, which targets supply chain
optimization, including planning, procurement, and logistical
enhancements. We understand that both programs are on track to
deliver full benefits by the end of 2025. We consider the
realization of these measures to be within management control and
largely independent of the market, therefore providing a degree of
confidence in their positive contribution to Synthomer's EBITDA and
margins from 2026 onward." That said, some of the gains can be
partly offset by higher operating costs, for example due to wage
inflation.
In 2023-2024, management delivered clear steps to reduce leverage,
manage liquidity, and strengthen the organizational structure.
These included GBP261 million in net proceeds from an equity raise
in September 2023; the disposal of its film and laminates business
in February 2023 for net cash proceeds of $260.3 million and of its
latex compounding business in April 2024 for a total consideration
of EUR27.5 million; the suspension of dividends from 2023 until
management-defined leverage returns sustainably to below 3.0x; the
deferral of bonuses; a cut in capital expenditure (capex); and a
focus on working capital, cash conversion, and margin protection
measures. The company also reduced the number of manufacturing
sites to 32 from 43. These actions were complemented by multiple
covenant resets and the issuance of EUR350 million bond in May 2024
to partly address debt maturities and manage liquidity.
Synthomer's rebalancing of the product portfolio toward specialty
chemicals is a cornerstone of its strategy. The strategy envisages
an increase in the share of specialty chemicals to 70% from the
current 55%/45% split for specialty and commodity chemicals,
respectively. S&P said, "We anticipate that this transition will be
achieved through further asset disposals and targeted investments
in innovation with particular emphasis on sustainability of the
products. This, in combination with cost savings and efficiencies,
should lead to stronger and more resilient profitability of
Synthomer over time. We consider the current mid-single digit
adjusted EBITDA margin to be below sector average."
The stable outlook reflects S&P's base-case expectation that
Synthomer's adjusted debt to EBITDA will reduce to about 5.4x-5.7x
in 2025 and about 4.0x in 2026, and that the company will generate
healthy positive FOCF in 2026.
S&P could lower the rating if:
-- Synthomer's FOCF became consistently negative, without
prospects of a swift recovery;
-- S&P forecasts that adjusted debt to EBITDA remained at about
6.0x, for example because of weaker-than-anticipated cost control,
leading to adjusted EBITDA margins not recovering above 9%; or
-- Further covenant pressure emerged.
S&P could raise the rating if:
-- Adjusted leverage remains well below 5.0x;
-- The company consistently generates positive FOCF of at least
GBP50 million; and
-- S&P forecasts that Synthomer will maintain adequate liquidity
and comfortable headroom under its financial covenants.
THOROLD DEWLING: Leonard Curtis Named as Administrators
-------------------------------------------------------
Thorold Dewling & Co Ltd was placed into administration proceedings
in the High Court of Justice Business and Property Courts in
Manchester, Insolvency & Companies List (ChD), Court Number:
CR-2024-001603, and Nicola Elaine Layland and Carl Derek Faulds of
Leonard Curtis were appointed as administrators on Jan. 21, 2025.
Thorold Dewling, trading as Oberon Solutions, engages in
recruitment.
Its registered office is at 1580 Parkway Solent Business Park,
Whiteley, Fareham, Hampshire, PO15 7AG.
Its principal trading address is at Southgate Chambers, 37-39
Southgate Street, Winchester, Hampshire, SO23 9EH.
The joint administrators can be reached at:
Nicola Elaine Layland
Carl Derek Faulds
Leonard Curtis
1580 Parkway
Solent Business Park
Whiteley, Fareham
Hampshire PO15 7AG
For further details, contact:
The Joint Administrators
Email: creditors.south@leonardcurtis.co.uk
Alternative contact: David Manning
*********
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