S&P lowers VistaJet, notes

S&P said it lowered its long-term corporate credit rating on VistaJet Group Holding Ltd. to B- from B.

The outlook is negative.

At the same time, the agency downgraded its long-term corporate credit ratings on VistaJet's core subsidiaries VistaJet Malta Finance plc and VistaJet Co Finance LLC to B- from B. It also lowered the issue rating on the $300 million notes due 2020 guaranteed by VistaJet to CCC from CCC+.

S&P said the actions reflect its forecast that VistaJet will rely on third-party funding in 2017, mainly because of increasing financial lease repayments.

The agency understands that the company could increase its sales by about 25% in the last 12 months, but further ramp up in EBITDA – at least to the extent forecasted in S&P’s base case – is needed to avert a potential liquidity shortfall. The financial lease obligations, which amounted to $1.65 billion as of Sept. 30, fully amortize over about 10 years and will lead to increasing repayment needs in 2017 and beyond.

In S&P’s view, the company has reduced headroom for any weaker-than-expected operating performance in the next 12 to 18 months given its less-than-adequate liquidity profile.

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