Fitch cuts Spirit Issuer notes to BB

Fitch Ratings said it downgraded Spirit Issuer plc's notes to BB from BB+.

The outlook is negative.

Fitch said the downgrade reflects the expected further reduction in managed estate EBITDA following the sale of 107 managed pubs toward the end of the third quarter as well as the deterioration in estate quality due to the lower EBITDA per pub in the remaining estate.

“Moreover, the prepayment of the class A6 and A7 notes in December 2017 removed the cash sweep mechanism,” the agency said in a news release.

“This mechanically reduces lease-adjusted free cash flow (FCF) debt service coverage ratio (DSCR) as Fitch had assumed that class A6 and A7 principal would be largely prepaid by excess cash under its rating case.”

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