Moody's downgrades Flender

Moody's Investors Service said it downgraded to B3 from B2 Flender International GmbH's €1.24 million senior secured term loan B, €90 million senior secured guarantee facility, €80 million equivalent renminbi senior secured term loan B2 and €205 million senior secured revolving credit facility.

The agency also lowered Flender Holding GmbH’s corporate family rating to B3 from B2 and the probability of default rating to B3-PD from B2-PD

"Today's rating action reflects our expectations that, given the ongoing difficult market conditions, Flender's key credit metrics will not be commensurate with a B2 rating in the next 12-18 months," said Dirk Goedde, a Moody's vice president, senior analyst and the lead analyst for Flender, in a press release.

"The still significant price increases in raw materials and energy will further put pressure on the company's profitability while the increasing interest rate environment and uncertain economic environment is expected to lead to lower revenue and order intake so that Moody's adjusted debt/EBITDA will increase towards 7x in 2023 while free cash flow/debt (Moody's adjusted) remains negative," Goedde continued.

"While we acknowledge the positive medium- to long-term demand trends for wind energy and therefore Flender's product portfolio, Flender is challenged to generate sufficient profitability levels to support its highly leveraged capital structure," Goedde said.

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