Moody’s assigns Babilou, loans B2

Moody’s Investors Service said it assigned first-time B2 corporate family and B2-PD probability of default ratings to Babar Bidco SAS, the top holding company that will own Babilou Group SAS.

Concurrently, Moody’s assigned B2 ratings to the €487 million first-lien senior secured term loan B due September 2027 and the €90 million first-lien senior secured revolving credit facility due March 2027, both borrowed by Babar Bidco.

“The B2 ratings reflect Babilou’s resilient business model and good industry demand dynamics supported by a favorable regulatory environment and tax regime mainly in France, its largest market,” said Víctor García Capdevila, a Moody’s assistant vice president and lead analyst for Babilou, in a press release.

“However, the rating also factors in Babilou’s high leverage, the execution risks associated with its rapid and ambitious inorganic growth strategy, and its relatively weak free cash flow generation,” added García.

The outlook is stable. “The stable outlook reflects the resiliency of the business model, the positive industry dynamics and Moody’s expectation of a slight reduction in leverage to 5.5x in 2021 and towards 5x thereafter,” the agency said.

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