S&P trims Arcelik to BB

S&P said it downgraded its ratings on Arcelik and its senior unsecured debt to BB from BB+.

“A marked drop in consumer demand for Arcelik's goods in 2020 will materially hurt the group's credit metrics. In line with S&P Global Ratings' forecasts of a global recession emerging due to the economic impact of Covid-19, consumers are likely to defer spending on home appliances and electronics apart from the necessary replacements,” said S&P in a press release.

“Arcelik's debt service metrics are likely to slide below 2x despite lower borrowing costs in Turkey and the group's supportive financial policy. The expected drop in EBITDA should translate into weaker-than-anticipated credit metrics, notably EBITDA interest coverage. The ratio will likely fall to around 1.5x-1.7x in 2020 from about 2.1x in 2019,” S&P said.

The outlook is negative.

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