S&P moves Greenhill to negative

S&P has shifted Greenhill & Co. Inc. to negative from stable.

The agency has also affirmed its BB issuer credit rating on Greenhill and its BB issue rating on its senior secured term loan. The recovery rating remains at 3.

As a result of global conditions due to the Covid-19 pandemic, S&P believes there is risk that the company could sustain leverage above 3x, funds from operations to debt below 25% and interest coverage below 6x, our thresholds for a downgrade.

Greenhill's EBITDA was lower than anticipated in 2019 as a result of lower-than-expected revenue ($301 million in 2019 versus $352 million in 2018) and tighter EBITDA margins.

On an adjusted basis, leverage (adjusted debt to EBITDA) was 2.9x as of year-end, which was very close to our downside threshold of 3x. Additionally, funds from operations to debt and EBITDA to interest expense deteriorated to 23.8% and 3.8x, respectively. Both of these metrics were worse than our stated downgrade thresholds (25% and 6x, respectively).

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