S&P cuts JAB

S&P said it downgraded the rating on JAB Holding Co. Sarl to BBB+ from A- and JAB Holdings BV’s notes to BBB+ from A-.

JAB’s loan to value ratio reached a level the agency no longer considers commensurate with an A- rating. JAB unwound the Cottage SPV in April 2020, which resulted in JAB repaying a €1.8 billion loan with cash. It also saw a €2.8 billion decline in the value of its Coty shares. During the first half of 2020, it made cash outflows of about €386 million related to redeemable shares, and S&P said it sees there will be redemptions for an additional €330 million by end-2020. These actions led to JAB’s LTV ratio surging to about 28% as of the end of September, up from 17% at year-end 2019.

“Our BBB+ rating takes into consideration that JAB’s management is actively putting in place actions to substantially reduce LTV in the next 12 months-15 months, maintaining an LTV ratio below 25% on a sustained basis by end-2021,” S&P said in a press release.

The outlook is stable.

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