Moody's lifts Elis view to positive

Moody's Investors Service said it affirmed Elis SA's Ba2 corporate family rating and Ba2-PD probability of default rating.

The agency also affirmed the provisional Ba2 rating of Elis's €3 billion euro medium-term note program, the Ba2 instrument rating of the €650 million notes due 2023 and €350 million notes due 2026 issued under the euro medium-term note program.

Moody's also affirmed the Ba2 rating of the €800 million senior unsecured notes due 2022 issued by Elis.

The outlook was revised to positive from stable.

The outlook revision reflect an expectation that Elis will experience a continued reduction in adjusted gross leverage to about 3.5x over the next 18 months, from 3.9x as of the end of 2018, Moody's said.

Elis will show a significant improvement in free cash flow generation from 2020 as it reduces tangible capital expenditures toward a more normalized level of 18%, the agency said.

The company will maintain a conservative financial policy based on its public net leverage target of about 3x, Moody's said.

These positive factors are partly mitigated by the increased pressure on margins expected in 2019 driven by higher-than-average inflation in personnel and energy costs, the agency said.

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