S&P downgrades Takko notes

Standard & Poor's said it lowered its issue rating on the senior secured notes issued by Takko Luxembourg 2 SCA (Takko 2) to B- from B. Takko Luxembourg 2 is the subsidiary of Salsa Retail Holding Debtco 1 Sarl (Takko), which in turn is the ultimate parent of Takko Fashion.

At the same time, S&P revised the recovery rating on Takko's senior secured notes downward to 5 from 4. The recovery rating of 5 indicates an expectation of modest (10%-30%) recovery prospects in the event of a payment default.

The downgrade of the issue rating and downward revision of the recovery rating reflect that Takko upsized the senior secured note issuance to €525 million from €450 million. S&P said it therefore envisages lower recovery prospects for the senior secured noteholders due to a lower stressed enterprise value to be shared among a larger amount of senior secured debt.

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