Moody's downgrades TLG

Moody's Investors Service said it downgraded the rating of the €600 million of senior unsecured notes maturing in 2026 to Baa2 from Baa1, originally issued by TLG Immobilien AG and for which it has been replaced by Aroundtown SA. TLG remains the guarantor.

The agency also lowered the subordinated notes originally issued by TLG Finance Sarl to Ba1 from Baa3, for which the issuer has also been replaced by Aroundtown SA. TLG no longer guarantees the hybrid notes. Moody’s changed the outlook to stable from negative.

The downgrades reflect higher interest rates, uncertainties around ongoing property value declines, lower demand for office space, weakening credit metrics and the risks of selling more assets, Moody’s said.

“We expect Moody's-adjusted debt/total assets to remain above 45% even when adjusting for the currently high cash balance, while we project fixed charge cover to deteriorate towards 3x in 2023 and beyond in 2024. The stable outlook positively reflects Aroundtown's strong liquidity profile, which provides some cushion relative to the upcoming debt maturities over the next years,” the agency said in a press release.

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