Moody’s ups Afflelou

Moody’s Investors Service said it upgraded to B2 from B3 the corporate family rating of 3AB Optique Developpement (Afflelou), a holding company owning 100% of French optical retailer Alain Afflelou. At the same time, the agency upgraded the company’s probability of default rating to B2-PD from B3-PD. Moody’s also upgraded to B2 from B3 the €425 million senior secured notes due 2023 (consisting of fixed and floating rate tranches) sold by the company. The outlook is stable.

“Our upgrade reflects the strengthening of Afflelou’s key credit metrics, its track record of successful operational execution, and our expectations that Afflelou will maintain its current earnings growth momentum and continue to generate positive free cash flow over the next 12 to 18 months,” said Guillaume Leglise, lead analyst for Afflelou and a Moody’s assistant vice president, in a press release.

The company’s earnings are improving and as such Afflelou’s gross leverage (as adjusted by Moody’s) improved to 5.6x in the 12 months to Oct. 31, from 5.9x at end of July 2018. Moody’s said it expects the company’s sales and earnings to continue to grow modestly in the next 18 months, enabling a further decrease in leverage to around 5.5x.

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