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S&P assigns BBB- to Fresenius loans
Standard & Poor's said it assigned its BBB- issue rating to the proposed incremental €1.2 billion senior secured debt facilities to be borrowed by Fresenius SE & Co. KGaA (FSE) and its subsidiary Fresenius Finance II BV.
The proposed facilities comprise a €450 million senior term loan A1, a €450 million senior term loan B2 and an incremental €300 million revolving credit facility.
At the same time, S&P assigned a recovery rating of 2 to the proposed facilities, reflecting an expectation of substantial (70%-90%) recovery for debtholders in the event of a payment default.
The issue and recovery ratings on the existing senior secured debt issued by FSE and its subsidiaries Fresenius Finance II BV and Fresenius US Finance I Inc. remain unchanged at BBB- and 2, respectively.
At the same time, S&P said it affirmed its BB+ issue rating on FSE's senior unsecured, guaranteed debt facilities. The recovery rating on the senior unsecured facilities remains unchanged at 3, indicating an expectation of meaningful (50%-70%) recovery in the event of a payment default.
S&P said it understands that FSE intends to refinance its €1.8 billion unsecured bridge facility - which it put in place to finance the acquisition of the majority of the hospitals of German hospital and clinic operator Rhon-Klinikum AG - with a longer-term debt instrument.
Assuming that FSE refinances the bridge facility with debt ranking pari passu with the existing senior unsecured debt, S&P said it could revise the recovery rating on the senior unsecured facilities downward to 4, reflecting an expectation of average (30%-50%) recovery in the event of a payment default. This would not have any effect on the issue rating on the senior unsecured facilities.
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