Moody’s downgrades VFS

Moody’s Investors Service said it downgraded Kiwi VFS SUB I Sarl’s corporate family rating to B3 from B2 and the probability of default rating to B3-PD from B2-PD.

Concurrently, Moody’s downgraded all the instrument ratings to B3 from B2, including the $39 million senior secured revolving credit facility due 2023, the $51 million senior secured revolving credit facility, guarantee facility due 2023, the £341 million first-lien senior secured term loan B1, due 2024 and the €363 million senior secured first-lien term loan B2, due 2024. All the facilities are borrowed by Kiwi VFS SUB II Sarl and guaranteed by Kiwi VFS SUB I.

“The downgrade was prompted by Moody’s view that the company will face significant pressure on all of its key credit metrics for considerably longer than previously expected due to travel disruptions caused by the coronavirus pandemic,” the agency said in a press release.

Moody’s said it forecasts leverage (Moody’s-adjusted debt/EBITDA) to approach 14x in 2021 and to slowly return to the level commensurate for a B-rated entity during 2022.

“However, cash burn continues to erode the company’s liquidity position and any unexpected delays in the recovery trajectory would require additional cost-saving and/or other actions to be implemented. The B3 ratings also factor in Moody’s expectation of continued shareholder support to be provided if necessary, on terms comparable to that already provided,” Moody’s said.

The outlook is negative.

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