Fitch assigns Punch Pubs B-, bond B+

Fitch Ratings said it assigned UK Punch Pubs Group Ltd. a first-time expected long-term issuer default rating B- with a stable outlook. Fitch also gave Punch Finance plc's planned £600 million bond, guaranteed by Punch group entities, an expected B+ senior secured rating with a recovery rating of RR2 (80%).

“The expected IDR is constrained by a post-refinancing high funds from operations (FFO) lease-adjusted gross leverage at 7.6x in financial year to mid-August 2022 (FY22) although a strong free cash flow (FCF) capacity enables the group to re-invest in pub conversions and increase EBITDA,” Fitch said in a press release.

The ratings also reflect Punch's UK pub portfolio, with a new debt structure. “Since easing of lockdown restrictions in mid-April (outdoor) and mid-May 2021 (indoor), drink volumes have quickly bounced back above Punch's pre-pandemic levels,” the agency said.

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