Moody's downgrades Transcom

Moody's Investors Service said it downgraded Transcom Holding AB's corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

Moody's also said it affirmed the B3 instrument rating assigned to the €180 million senior secured notes due 2023, issued by Transcom Holding.

The outlook is stable.

The downgrades mainly reflect the significant increase in the company's adjusted gross leverage to 7.7x as of Dec. 31, 2018, from 5.5x as of Dec. 31, 2017, Moody's said.

The company experienced larger-than-expected revenue decline and higher-than-projected operational restructuring charges, the agency said.

While Transcom may experience significant de-leveraging the next 12 months, driven by cost savings realized in 2018 and projections for 2019, an improvement in the leverage ratio from such a high level in a limited 12-month period is subject to execution risk, Moody's said.

The company's weaknesses are partly mitigated by its position among the largest European customer relationship management operators and leading presence in the Nordic region, the agency said.

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