oEuropcar has announced intentions to commence debt-restructuring discussions with its corporate debt creditors to address the sustainability of its capital structure and liquidity constraints amid COVID-19 disruption.
oGiven the highly uncertain economic conditions, and in light of the group's currently unsustainable capital structure, we think that a debt restructuring is inevitable.
oWhile the exact nature of any restructuring is currently unknown, we see a high probability of default, given the group's goal of lowering its corporate indebtedness to implement its 2021-2023 transformation plan.
oWe are therefore downgrading
oThe negative outlook incorporates the group's intentions to pursue debt-restructuring negotiations with corporate lenders. In our view, there is a high probability it will receive debt holders' consent to pursue negotiations and ultimately restructure its debt. If the company does not obtain consent or the restructuring negotiations fail, we cannot rule out a conventional default.
On
Given difficult economic conditions in the global leisure and travel sector, and the group's leveraged corporate financial position, we believe
We currently forecast a material deterioration in the group's operating performance in 2020 and 2021 due to COVID-19, resulting in a cash burn of up to
Without the benefit of a successful restructuring transaction, we also view the group as potentially exposed to a liquidity shortfall in the short term. As of
oHealth and safety
The negative outlook incorporates that the group intends to pursue debt-restructuring negotiations with corporate lenders. In our view, there is a high probability the group will receive consent from debtholders to pursue negotiations to restructure its debt. If the company does not obtain consent or restructuring negotiations fail, we cannot rule out a conventional default.
We would lower our issuer credit rating on
We could also lower our issuer credit and issue ratings to 'D' if
We could raise the issuer credit rating if
Related Criteria
oGeneral Criteria: Group Rating Methodology,
oCriteria | Corporates | General: Corporate Methodology: Ratios And Adjustments,
oCriteria | Corporates | Industrials: Key Credit Factors For The Operating Leasing Industry,
oCriteria | Corporates | General: Recovery Rating Criteria For Speculative-Grade Corporate Issuers,
oCriteria | Corporates | Recovery: Methodology: Jurisdiction Ranking Assessments,
oCriteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers,
oGeneral Criteria: Country Risk Assessment Methodology And Assumptions,
oCriteria | Corporates | General: Corporate Methodology,
oGeneral Criteria: Methodology: Industry Risk,
oGeneral Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities,
oGeneral Criteria: Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings,
oGeneral Criteria: Principles Of Credit Ratings,
oEuropcar Downgraded To 'CCC+' From 'B-' On COVID-19 Disruption And Potential Liquidity Pressure; Outlook Negative ,
S&P Global Ratings is the world's leading provider of independent credit ratings. Our ratings are essential to driving growth, providing transparency and helping educate market participants so they can make decisions with confidence. We have more than 1 million credit ratings outstanding on government, corporate, financial sector and structured finance entities and securities. We offer an independent view of the market built on a unique combination of broad perspective and local insight. We provide our opinions and research about relative credit risk; market participants gain independent information to help support the growth of transparent, liquid debt markets worldwide.
S&P Global Ratings is a division of
.
(C) 2020 M2 COMMUNICATIONS, source