S&P cuts InterContinental Hotels

S&P said it downgraded InterContinental Hotels Group plc to BBB- from BBB and assigned a negative outlook.

A slower recovery for the lodging sector than first thought will cause a spike in leverage, the agency said.

“We anticipate material weakening of IHG’s credit metrics for 2020, and expect leverage to spike and become harder to reduce to below 3.5x--the threshold for the previous BBB rating. Under our latest assumptions based on macroeconomic forecasts for 2020 and 2021, we believe that IHG will face continued top-line pressure for 2020, resulting in extremely low demand for hotel rooms over the next few months, rather than for several weeks,” the agency said in a press release.

The negative outlook mirrors S&P’s view the company’s financial metrics will be under considerable pressure over the next few quarters, given the effect of lockdown and social-distancing measures, the agency said.

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