Moody’s rates Ardagh notes Caa2

Moody's Investors Service said it assigned a Caa2 instrument rating to the new $350 million senior secured PIK notes due 2023 and borrowed by ARD Securities Finance Sarl (Ardagh).

Concurrently, the agency withdrew the B2 corporate family rating, B2-PD probability of default rating and stable outlook at Ardagh Packaging Group Ltd. and assigned a B2 corporate family rating, B2-PD probability of default rating and stable outlook at ARD Securities Finance, the new topmost holding company carrying rated debt.

The move of the corporate family rating and probability of default rating reflects both the current transaction and changes to the legal structure of the group in 2017 around the IPO of the operating company Ardagh Group SA.

Fitch said the Caa2 instrument rating for the new PIK notes reflect their ranking in the capital structure of Ardagh, after both the secured and unsecured debt of operating company Ardagh Group, as well as the existing PIK toggle notes at ARD Finance SA, a holding company of Ardagh Group. and wholly owned subsidiary of ARD Securities Finance. The new PIK notes will be secured by a pledge over the shares of ARD Finance.

The new PIK notes add 0.2 times to Moody's-adjusted debt/EBITDA so that pro-forma leverage is at 7.2 times for the 12 months to September 2017. Hence Ardagh's leverage remains high for the rating category, the agency explained.

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