Fitch cuts SI Group

Fitch Ratings said it downgraded SK Mohawk Holdings, Sarl's and Polar U.S. Borrower, LLC's (collectively, SI Group) long-term issuer default ratings to CCC from B-. The agency also lowered the issue ratings of Polar U.S. Borrower's senior secured term loan and revolver to CCC+/RR3 from B/RR3 and senior unsecured notes to CC/RR6 from CCC/RR6.

“The downgrade to CCC reflects the deterioration in the issuer's operating profile since 2021 and persisting through 3Q 2023, and an overwhelming interest burden, which resulted in negative FCF generation over the time period and EBITDA Leverage spiking to 15.2x at LTM 3Q23. Fitch expects FCF generation to remain negative and for EBTIDA leverage to remain above 10x through the forecast horizon. The rating is further constrained by a challenged liquidity position, and the increased potential for near-term asset sales,” Fitch said in a press release.

The agency also noted Polar’s term loan B with about $1.3 billion outstanding is due October 2025 and will need to be refinanced, which may be challenging given the company’s recent performance.

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