Moody's assigns Axactor B1, B3

Moody's Investors Service said it assigned a B1 corporate family rating to Axactor SE and a B3 issuer rating

“The B1 CFR reflects the company's (1) evolution as a top five nonperforming debt collection company in Europe by estimated remaining collections (ERC) within six years, (2) favorable cost structure (3) and strong capitalization. At the same time, we take into account Axactor's (4) still limited track record and financial history since its inception in 2015 and inherent risks related to rapid growth, (5) its evolving liquidity and funding profile with strong reliance on its secured credit facility, (6) the current operating environment for debt purchasers and risks inherent to the debt collection business with a volatile supply of nonperforming loans, risks of mispricing and an evolving regulatory environment,” Moody’s said in a press release.

“The B3 issuer ratings reflect the application of Moody's loss given default for speculative-grade companies methodology (published in December 2015), Axactor's capital structure and particularly the priorities of claims and asset coverage in the company's current liability structure. The size of Axactor's secured revolving credit facility (RCF) indicates higher loss-given default for senior unsecured creditors, leading to issuer ratings two notches below the Axactor's B1 CFR,” the agency explained.

The outlook is positive, which reflects the expectation that Axactor’s financial performance in the next 12-18 months will continue to recover from the pandemic-induced weaker performance in 2020 and return to the pre-crisis trend for growth and profitability, Moody’s said.

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