Fitch rates Encore's notes BB+

Fitch Ratings assigned Encore Capital Group, Inc.'s (BB+/Stable) proposed £250 million issue of senior secured fixed-rate notes due 2028 an expected rating of BB+.

Under the global funding structure Encore implemented in 2020, senior secured notes issued by Encore and Cabot Financial (Luxembourg) SA rank equally with each other as senior secured obligations, guaranteed by most Encore subsidiaries. Therefore, the refinancing has no net impact on consolidated leverage or on the relative rank of the new notes.

Encore's long-term issuer default rating reflects its leading franchise in the debt purchasing sector in its chosen markets, its strong recent profitability and its low leverage by the standards of the sector.

The rating also takes into account the concentration of Encore's activities within debt purchasing and the potential for collections performance to slow down from recent levels as pandemic-driven economic support measures are phased out.

Fitch expects the proceeds of the notes to be used principally to repay an equivalent sum of other notes due 2023 issued by Encore's subsidiary Cabot Financial (Luxembourg) SA.

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