Fitch rates Kier, notes BB+

Fitch Ratings said it published Kier Group plc's long-term issuer default rating of BB+. The outlook is stable. The agency also published BB+/RR4 ratings for the group’s planned £250 million senior unsecured notes.

“Kier's long-term IDR reflects the group's strong domestic market position driven by its ability to deliver across a broad range of construction segments. The business profile is further supported by strong project diversification across government and local authority construction and infrastructure projects, thus benefiting from a timely payment structure. Fitch expects the group to maintain its prudent financial discipline to sustain positive free cash flow (FCF) generation and to deleverage its balance sheet driven by improved profitability,” the agency said in a press release.

However, Fitch noted, “Kier's rating is mainly constrained by the lack of geographical diversification with its operations almost exclusively focused in the U.K., limited diversification of dividend streams and its moderate leverage.”

Fitch said it estimates the company's EBITDA leverage (Fitch-defined) to gradually dip to below 2x in 2025 from historically high levels in 2019-2020 and then fall even lower to below 1.5x in 2026-2027.

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