Moody’s shifts Givaudan view to negative

Moody’s Investors Service said it changed the outlook for Givaudan SA to negative from stable and affirmed its Baa1 rating.

The outlook revision to negative from stable reflects Moody's expectation the string of bolt-on acquisitions announced by Givaudan since taking over Naturex in 2018 will leave its leverage metrics weakly positioned in the next 12-18 months and delay the deleveraging required to underpin its rating at the Baa1 level, the agency said.

“An outlook stabilization would, therefore, be predicated on Givaudan's ability and willingness to use future free cash flow after capex and dividends (FCF) to bring back Moody's-adjusted total debt to EBITDA below 3x and retained cash flow (RCF) to net debt in the high teens in percentage terms during the course of 2021,” Moody’s said in a press release.

S&P revises Arconic view to stable

S&P said it revised the outlook for Arconic Inc., to be renamed Howmet Aerospace Inc., to stable from negative and affirmed the company’s BBB- rating.

“The outlook revision reflects that pro forma credit metrics will improve in 2020 and further in 2021 as a result of the spin-off of the rolled products business. The company announced that the spin-off of the rolled products segment (to be named Arconic Corp.) will raise $1.2 billion in debt to pay a $700 million dividend and provide initial liquidity for the new company. Howmet, which will consist of just the aerospace operations after the transaction, plans to use the proceeds from the dividend and cash on hand to pay down $1.3 billion in debt,” said S&P in a press release.

S&P rates Elanco loans, notes BB+

S&P said it assigned BB+ issue-level rating to Elanco Animal Health Inc.’s proposed revolving credit facility, term loan A, term loan B and senior secured notes. The recovery rating is 3, reflecting the expectation for meaningful recovery (50%-70%; rounded estimate: 65%) in the event of a payment default. Proceeds will be used for the acquisition of Bayer AG’s animal health unit.

“We are also lowering our issue-level rating on Elanco’s unsecured notes to BB from BB+. The recovery rating is 5, reflecting our expectation for modest recovery (10%-30%; rounded estimate: 15%) in the event of a payment default,” S&P said in a press release.

Based on the proposed capital structure, S&P expects to lower the issuer credit rating to BB from BB+ and assign a stable outlook. “We also expect to lower the issue-level ratings on the secured debt to BB from BB+ and the issue-level ratings on the unsecured debt to BB- from BB,” the agency said.

S&P affirmed Elanco’s BB+ rating.

Fitch rates QVC notes BBB-

Fitch Ratings said it assigned a BBB-/RR1 rating to QVC, Inc.'s proposed offering of senior secured notes. QVC is expected to use the proceeds primarily to repay borrowings under its senior secured credit facility along with general corporate purposes.

Fitch said it expects sufficient proceeds will be directed toward debt repayment to make this largely a leverage neutral transaction as management has not articulated any change to their net leverage target of 2.5x. Fitch notes that, simultaneous with the closing of these new notes, QVC intends to reduce its revolver availability to $3.05 billion from $3.65 billion.

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