Moody's downgrades Pyxus

Moody's Investors Service said it downgraded Pyxus International, Inc.'s corporate family rating to Caa2 from Caa1 and its probability of default rating to Caa2-PD from Caa1-PD. Moody's also downgraded the company's second-lien notes to Ca from Caa2.

“The downgrade reflects the company's weakening liquidity and continued delay in monetizing a portion of its FIGR business (cannabis), proceeds of which were expected to repay debt. Absent this monetization, Moody's now expects debt/EBITDA to exceed 11 times by March 2020, making it increasingly difficult for the company to address its upcoming large debt maturities. Moreover, the downgrade of the second-lien notes also considers the potential for a distressed exchange to materially impact their loss given default,” said Moody’s in a press release.

However, Moody's affirmed the company's ABL revolving credit facility at Ba3 and the company's first-lien notes at B2. Pyxus' speculative grade liquidity rating remains at SGL-4. The outlook is negative.

S&P puts Era notes on watch, view to stable

S&P said it placed Era Group Inc.’s B- issue-level rating on Era's 7¾% senior unsecured notes due 2022 on CreditWatch with positive implications given the likelihood it will upwardly revise the recovery rating to 2 from 3 once the company completes its merger with Bristow Group in an all-stock deal.

“The deal will improve Era's scale in the U.S. Gulf of Mexico and expand its presence globally in markets like the U.K., Norway and Nigeria, while also providing some diversification with the addition of Bristow's U.K. search and rescue (SAR) contract,” S&P said in a press release.

The agency affirmed its B- issuer credit rating on Era and revised the outlook to stable from negative. “The stable outlook reflects our view that Era's leverage metrics will show a modest improvement over the next 12 months as the company integrates Bristow and meaningfully expands its geographic foothold outside of the U.S.,” S&P said.

S&P revises TalkTalk view to positive

S&P said it revised the outlook on TalkTalk Telecom Group plc to positive from stable and affirmed its BB- long-term issuer credit rating. The positive outlook reflects the potential for an upgrade over the next 12 months if TalkTalk stabilizes its revenue base and significantly lowers its exceptional costs.

TalkTalk announced it reached an agreement to sell its FibreNation subsidiary to CityFibre Holdings for £200 million. The sale is expected to close in March.

The FibreNation sale will cut TalkTalk's leverage and improve its cash generation. The £200 million cash proceeds from the sale, nearly all of which will be used to repay debt, will reduce TalkTalk's S&P Global Ratings-adjusted debt to EBITDA by about 0.6x–0.7x, to about 3.5x–3.6x in FY2020 (ending March 31, 2020), compared with 4.2x in FY2019. “We also note that FibreNation's projected capex is £22 million in FY2020 and its operating expenditure (opex) is about £3 million-£4 million,” said S&P in a press release.

S&P rates AutoCanada notes B-, view to stable

S&P said it assigned its B- issue-level and 5 recovery ratings to AutoCanada Inc.’s proposed C$125 million of unsecured notes. Proceeds along with drawings under its amended and extended revolving credit facilities will be used to redeem its C$150 million of unsecured notes due 2021. Concurrent with the refinancing, AutoCanada plans to downsize its revolver to C$175 million from C$250 million and extend the facility’s maturity to 2023.

S&P also revised the company’s outlook to stable from negative and affirmed the B issuer rating.

“The stable outlook reflects our expectation that the proposed refinancing transaction should reduce refinancing risks by meaningfully extending its maturity profile. The outlook also reflects our expectation that credit measures should strengthen over the next couple of years, mainly as the company executes on initiatives to improve its cost profile and deploys positive discretionary cash flow primarily to repay debt outstanding. We forecast adjusted debt-to-EBITDA will be about 5x and adjusted EBITDA interest coverage about 3x in 2020,” said S&P in a press release.

S&P shifts Targa view to stable

S&P said it revised its outlook for Targa Resources Corp. to stable from positive.

“The outlook revision reflects that we expect the company’s leverage to remain above 5x in 2020. While we anticipate that Targa will continue to materially increase its cash flows this year, we expect its leverage to remain above 5x in 2020. Nonetheless, we expect the company’s free cash flow generation to improve in 2020 and anticipate that it will be roughly free cash flow neutral for the year after having experienced a large free cash flow deficit in 2019,” said S&P in a press release.

S&P affirmed Targa’s BB rating as well the BB rating on its unsecured debt. The agency also affirmed the B+ rating on its structurally subordinated debt. The 3 recovery rating on the unsecured debt and 6 recovery rating on the subordinated debt remain unchanged.

Moody’s rates Arconic Rolled bonds Ba3

Moody’s Investors Service said it assigned a Ba3 rating to Arconic Rolled Products Corp.’s senior secured second-lien bonds. At the same time, Moody’s assigned an SGL-1 speculative grade liquidity rating.

The agency affirmed the Ba2 corporate family rating, Ba2-PD probability of default rating and the Ba1 rating on the company’s $1 billion senior secured first-lien revolving credit facility and $800 million senior secured first-lien term loan B. The outlook is negative.

“The Ba2 CFR reflects Arconic’s end-market diversity and global footprint but incorporates softer market conditions in several of its end markets as well as the expected impact of Boeing’s production suspension of its 737 Max, which will affect all suppliers to this Boeing platform. ARP’s environmental and other unknown magnitude of liabilities from the Grenfell fire are also considerations in the CFR rating,” said Carol Cowan, a Moody’s senior vice president and lead analyst for Arconic, in a press release.

Moody’s rates Castle US notes Caa2

Moody’s Investors Service said it assigned Castle US Holding Corp.’s proposed senior unsecured notes a rating of Caa2. Proceeds will be used to fund a special distribution of about $300 million to an affiliate of Platinum Equity LLC.

The agency also upgraded the ratings on the company’s senior secured first-lien bank facility to B2 from B3. The upgrade of the issuer’s bank debt reflects the incremental first-loss support provided by the issuance of the unsecured bonds. The outlook is stable.

Moody’s also affirmed the company’s B3 rating as well as its B3-PD probability of default rating.

S&P assigns Castle notes CCC

S&P said it assigned its CCC issue-level rating and 6 recovery rating to Castle US Holding Corp.'s (doing business as Cision) proposed $300 million senior unsecured notes. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 5%) of principal in a payment default. The company will use proceeds to fund a shareholder distribution.

“The proposed transaction has no impact on our B- issuer credit rating and stable outlook on Cision's parent Castle Intermediate Holding V Ltd. While we forecast adjusted leverage will remain elevated above 8x over the next 12-24 months, we expect free operating cash flow (FOCF) to debt to remain above 3%, our threshold for the current ratings,” said S&P in a press release.

S&P rates Elanco loans, notes BB+

S&P said it assigned BB+ issue-level rating to Elanco Animal Health Inc.’s proposed revolving credit facility, term loan A, term loan B and senior secured notes. The recovery rating is 3, reflecting the expectation for meaningful recovery (50%-70%; rounded estimate: 65%) in the event of a payment default. Proceeds will be used for the acquisition of Bayer AG’s animal health unit.

“We are also lowering our issue-level rating on Elanco’s unsecured notes to BB from BB+. The recovery rating is 5, reflecting our expectation for modest recovery (10%-30%; rounded estimate: 15%) in the event of a payment default,” S&P said in a press release.

Based on the proposed capital structure, S&P expects to lower the issuer credit rating to BB from BB+ and assign a stable outlook. “We also expect to lower the issue-level ratings on the secured debt to BB from BB+ and the issue-level ratings on the unsecured debt to BB- from BB,” the agency said.

S&P affirmed Elanco’s BB+ rating.

S&P rates IM Growth notes B-

S&P said it assigned preliminary B- ratings to IM Growth SAS, the holding company for Isabel Marant, and the proposed €200 million of senior secured notes that will be used to refinance its capital structure and distribute dividends to shareholders, including the cofounders and Montefiore Investment. Isabel Marant will sell the notes, which S&P assigned a recovery rating of 3 to indicate the expectation of recovery in the 50%-70% range (rounded estimate 60%) in the event of a default.

The outlook is stable. “The stable outlook reflects our expectation that IM will generate adjusted EBITDA margin of 25%-26% in the next 12 months and maintain adjusted debt to EBITDA of 5x-5.5x and FFO cash interest coverage of 2x-2.5x. We expect the increase in marketing spending will erode the company's EBITDA margin in the coming years but support revenue growth. We also expect the company will generate positive FOCF of €5 million-€10 million over the next 12-18 months,” said S&P in a press release.

Moody’s rates NFP facilities B2

Moody's Investors Service said it assigned B2 ratings to a new five-year senior secured revolving credit facility and a new seven-year senior secured term loan being issued by NFP Corp. The new facilities will refinance the company's $150 million revolver and $1.8 billion term loan with somewhat higher face amounts and longer maturities. Moody's expects to withdraw the ratings on the revolver and term loan once the refinancing closes in early February. The outlook for NFP remains unchanged at stable.

NFP will have pro forma debt-to-EBITDA around 7.5x, (EBITDA - capex) interest coverage in the range of 1.6x-2x, and free-cash-flow-to-debt in the low single digits after the refinancing, according to Moody's estimates. The agency expects NFP to maintain financial leverage at or below 7.5x, with earnings growth from existing and acquired operations offsetting periodic increases in borrowings. These pro forma metrics reflect Moody's adjustments for operating leases, contingent earnout obligations, certain non-recurring items and run-rate EBITDA from acquisitions.

Fitch rates QVC notes BBB-

Fitch Ratings said it assigned a BBB-/RR1 rating to QVC, Inc.'s proposed offering of senior secured notes. QVC is expected to use the proceeds primarily to repay borrowings under its senior secured credit facility along with general corporate purposes.

Fitch said it expects sufficient proceeds will be directed toward debt repayment to make this largely a leverage neutral transaction as management has not articulated any change to their net leverage target of 2.5x. Fitch notes that, simultaneous with the closing of these new notes, QVC intends to reduce its revolver availability to $3.05 billion from $3.65 billion.

S&P assigns Rite Aid notes CCC-

S&P said it assigned its CCC- issue-level rating and 6 recovery rating to Rite Aid Corp.’s proposed $600 million of senior secured notes due 2025. The 6 recovery rating indicates the expectation lenders would receive negligible recovery (0%-10%; rounded estimate: 0%) in the event of a payment default. The company plans to use the proceeds to fund a tender for a similar amount of its unsecured notes due 2023. The proposed notes will be secured by a first-priority lien on the company’s non-asset-based lending facility collateral and a second-priority lien on the ABL collateral.

All of S&P’s other ratings on Rite Aid, including the CCC+ issuer credit rating, remain unchanged. “We continue to view the company’s capital structure as unsustainable because of industry headwinds and its modest cash flows relative to its outstanding debt. We believe Rite Aid’s sufficient liquidity and lack of near-term debt maturities will provide it with at least 12 months to execute a turnaround plan,” said S&P in a press release.

Moody's assigns TransDigm loans Ba3

Moody's Investors Service said it assigned Ba3 ratings to TransDigm Inc.'s new senior secured term loans. All other ratings, including the B1 corporate family rating and the B1-PD probability of default rating, are unchanged. Proceeds will be used to refinance, reprice and extend the maturity of a portion of term loan debt. Ratings on the existing term loans will be withdrawn upon close. The outlook remains stable

The Ba3 ratings for TransDigm's senior secured term debt and senior secured bonds are a notch above the CFR, reflecting their seniority and first-lien security interest in substantially all assets of the company on an aggregate basis. The B3 rating for the company's senior subordinated notes is two notches below the CFR and reflects the subordination of this debt relative to the aforementioned first-lien debt, the agency said.

Both the bank credit facilities and the subordinated notes are guaranteed by all of TransDigm's domestic subsidiaries, as well as the company's holding company parent TDG.

Fitch gives Arconic Rolled notes BB+

Fitch Ratings said it assigned an expected BB+/RR4 rating to Arconic Rolled Products Corp.'s new senior second-lien notes. The notes were issued as part of the spin-off transaction from Arconic Inc. Arconic Rolled’s issuer default rating is also an expected BB+, and the company's $800 million senior first-lien secured term loan and $1 billion senior first-lien secured revolver are rated an expected BBB-/RR1. The outlook is stable.

The company’s ratings are supported by the company's strong financial structure, which is generally in line with companies rated at investment grade levels. The company's end-markets are also relatively diversified, and comprised of industries that are shifting towards lighter-weight materials, which Arconic Rolled specializes in, Fitch said.

Moody’s gives IM Group, notes B2

Moody’s Investors Service said it assigned a first-time B2 corporate family rating and B1-PD probability of default rating to IM Group SAS (Isabel Marant), the ultimate holding company owner of French luxury apparel retailer Isabel Marant. Moody’s also assigned a B2 rating, with a loss given default assessment of LGD5, to the proposed €200 million senior secured notes due 2025, to be issued by IM Group SAS. The outlook is stable.

The proceeds will be used to repay bank debt partly repay shareholders as part of the group’s reorganization, which comprises the merger of certain holding companies of the group and pay related transaction costs.

“Isabel Marant’s B2 rating reflects the company’s good brand recognition in the luxury fashion segment, its diversified distribution channels and geographic presence, its solid and growing profitability, and our expectations of positive free cash flow,” said Guillaume Leglise, a Moody’s assistant vice president and lead analyst for Isabel Marant, in a press release. “The rating also incorporates Isabel Marant’s small scale, its high exposure to fashion risk, limited brand portfolio primarily focused on womenswear and its high initial leverage.”

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