Fitch cuts PagesJaunes bond, Solocal to negative

Fitch Ratings said it revised Solocal Group SA's outlook to negative from stable and affirmed its long-term issuer default rating at B-.

At the same time the agency downgraded the senior secured bonds issued by PagesJaunes Finance & Co. SCA to B/RR3 from B+/RR2.

Fitch said the outlook revision reflects its view of the increased volatility of earnings and vulnerability of cash flows that Solocal faces in a challenging sales environment. The business continues to adapt to a digital world where operating expenses and investment needs are significantly higher than in the past.

The downgrade of the bond rating reflects the agency’s view that enterprise value multiples, both on a performing and distressed basis, for the type of risk inherent in Solocal's business, have been lowered. The material deterioration of trading performance, combined with an analysis that applies a lower post-distress multiple and valuation, results in recoveries of RR3 for the senior secured bonds.

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