S&P rates Hurtigruten loan B-

S&P said it affirmed the B- long-term corporate credit rating on Silk Bidco AS, which is trading as Hurtigruten AS.

The outlook is stable.

The agency also said it assigned a B- rating to the company's proposed €660 million senior secured term loan and revolving credit facility agreement.

The recovery rating on the senior secured notes is 3, indicating 50% to 70% expected default recovery.

S&P said it expects to withdraw the rating on the existing €455 million bond on full repayment.

The affirmation of the corporate credit rating follows news that Hurtigruten plans to refinance its entire capital structure with a new €660 million term loan and revolving credit facility.

Although the agency said it does not expect the refinancing transaction to materially affect the forecasted debt-to-EBITDA ratio, given that it is largely debt for debt, S&P said it views the proposed refinancing transaction favorably because it will extend the maturity of the debt by four years and reduce the cost of debt.

More importantly, the company will have access to a fully undrawn revolver of about €85 million, the agency noted.

This facility will provide a sufficient cushion to mitigate the effects of any potential operating challenges for next two years – this before the contribution from the new build vessels enhances earnings, S&P said.

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