Fitch drops Globe Trade Centre to junk

Fitch Ratings said it downgraded Globe Trade Centre SA's long-term issuer default rating to BB+ from BBB- and placed it on rating watch negative. The agency also lowered GTC's senior unsecured debt rating and GTC Aurora Luxembourg SA's senior unsecured bond rating to BB+ from BBB- and placed it on RWN. The bond, which is guaranteed by GTC, has an RR4 recovery rating.

“The downgrades reflect GTC's leverage exceeding Fitch's downgrade rating sensitivity threshold of 9.5x net debt/EBITDA and an uncertain path to deleveraging. This uncertainty is unaided by the shareholders' decision to distribute around €30 million of dividends despite GTC management's intention to retain 2022 profits within the company. Recent changes to the management board mean that a coherent strategy leading to leverage reduction will take time to develop,” the agency said in a press release.

Any Ultima acquisition-related cash spend may add pressure on GTC's credit metrics, and asset sales will take time, especially in the current inconducive market environment, Fitch said.

Fitch said it aims to resolve the RWN when it knows the final terms of the Ultima deal.

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