Moody's rates Dufry notes Ba3

Moody's Investors Service said it assigned a Ba3 corporate family and probability-of-default ratings to Dufry AG and a provisional Ba3 rating (LGD4, 59%) to the proposed $500 million of eight-year senior notes to be issued by Dufry Finance SCA, a wholly owned indirect subsidiary.

The outlook is stable.

Proceeds will be used to refinance term loan facilities that mature in August 2013.

"The assigned Ba3 [corporate family rating] primarily reflects the cyclical nature of Dufry's travel retail business which is tied to international passenger traffic, with an exposure to certain discretionary items (e.g. jewelry, leather, accessories) and its high exposure to emerging markets - representing 60% of revenue in 2011 - which can create volatility in cash flows," Yasmina Serghini-Douvin, a Moody's vice president, said in a statement.

"In addition, the Ba3 rating reflects risks associated with the renewal of concession contracts especially in the company's key markets, such as Brazil, where several concession contracts will come up for renewal in 2014 and 2015."

The Ba3 rating also incorporates Dufry's adjusted gross debt-to-EBITDA ratio estimated to be about 5 times in the 12 months to June 30.

The Ba3 rating reflects Dufry's track record and know-how in operating a travel retail business, international footprint, organic sales growth and solid operating margins, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.