S&P downgrades Galapagos

S&P said it lowered its long-term corporate credit rating on Luxembourg-based heat-exchanger equipment provider Galapagos Holding SA to CCC+ from B-.

The outlook is negative.

At the same time, S&P lowered the following ratings on the group's debt:

• The issue-level rating on the super senior secured facilities, comprising a €75 million revolving credit facility and a €400 million guarantee facility, to B from B+. The 1 recovery rating on these facilities remains unchanged, reflecting expectations of very high (90%-100%, rounded estimate: 95%) recovery prospects in the event of a payment default;

• The issue rating on the senior secured notes to CCC+ from B-. The recovery rating on the notes is 3, indicating expectations of meaningful (30%-50%, rounded estimate: 50%) recovery prospects in the event of a payment default; and

• The issue-level rating on the senior unsecured notes to CCC- from CCC. The recovery rating on these notes is 6, reflecting expectations of negligible (0%-10%, rounded estimate: 0%) recovery in the event of a payment default.

“The downgrade to CCC+ reflects our view that financial commitments might be unsustainable over the long term, given continued softness of end markets (power, oil and gas, and marine), and ongoing restructuring charges that are depressing EBITDA. In light of the risk of deteriorating liquidity if planned asset sales are delayed or halted, we have assigned a negative outlook,” S&P said in a news release.

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