Moody's downgrades Aptos

Moody's Investors Service said it downgraded 1236904 BC Ltd.'s (Aptos) corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and its senior secured first-lien credit facility (revolver and term loan) rating to Caa1 from B3. The outlook was changed to negative from stable.

“The downgrade reflects Moody's expectation for a sharp decline in Aptos' earnings and cash flows in 2020 due to the coronavirus (Covid-19) pandemic and its exposure to the retail sector, which is currently facing considerable stress. Though there is significant uncertainty about the steepness of the economic decline and the strength of a likely recovery that could follow, Moody's believes that the extraordinary circumstance around temporary store closures, stay-at-home orders and travel restrictions will trigger a severe pullback in consumer spending, which will cascade into weaker demand for Aptos' products over the next 12-15 months,” Moody’s said in a press release.”

The agency changed the outlook to negative from stable. “The negative outlook reflects Moody's expectation for weakening operating performance and liquidity stemming from the Covid-19. The negative outlook also reflects uncertainty surrounding the depth and duration of the outbreak and Aptos' ability to quickly adjust cost and maintain at least adequate liquidity,” the agency said.

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