Moody’s trims Elsan

Moody’s Investors Service said it lowered its ratings for Elsan SAS, its senior secured revolving credit facility due December 2027 and its senior secured term loan B due June 2028 to B2 from B1. The agency also downgraded the probability of default rating to B2-PD from B1-PD and revised the outlook to stable from negative.

“Today's rating downgrade reflects the limited improvement in Elsan's credit metrics since the acquisition of C2S in 2021 due to external factors including covid-related disruptions, staff shortage and cost inflation. More specifically, Moody's-adjusted debt/EBITDA and EBITA/interest were 6.7x and 1.6x respectively at year-end 2022 compared to proforma metrics of 6.8x and 1.7x respectively when the acquisition of C2S was announced in early 2021,” the agency said in a statement.

Moody’s explained the improved outlook reflects an expectation for, “higher tariffs in 2023, cost efficiencies and lower cost inflation to support a reduction in Moody's-adjusted leverage towards 6x over the next 12-18 months. However, the rating agency expects Moody's-adjusted EBITA/interest to weaken to around 1.5x over the same period because of higher interest rates, partly offset by the company's hedging strategy.”

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