Moody’s rates Novacap loans B1

Moody's Investors Service said it assigned a definitive B1 corporate family rating and a B1-PD probability of default rating to Novacap Group Holding and definitive B1 (LGD3) ratings to the €435 million term loan B due 2023 and the €90 million revolving credit facility due 2022 raised by Novacap Group Bidco, a direct subsidiary of Novacap. The outlook is stable.

The ratings of Novacap International SAS have been withdrawn.

The agency said the assigned ratings take into account the capital structure following the third leveraged buyout completed in June 2016, as well as the main developments since then, including the prospects of a possible acquisition of French fine chemical company PCAS based on the terms announced on May 15.

Novacap's B1 corporate family rating reflects the company's strong market positions in Europe in mostly non-cyclical and resilient end markets, growing focus on penetrating the more profitable and resilient pharmaceutical industry, long-term customer relationship and strategic location close to its end customers, good 2016 EBITDA margin and expectation of gradual deleveraging from mid-2017 onwards, Moody’s said.

However, the agency said the rating is constrained by the company's relatively small size, sensitivity to raw material price volatility, significant exposure to GDP-linked and lower-margins products of its performance chemicals division and relatively high pro forma adjusted gross leverage for the rating category at 5.3x as of December.

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