S&P cuts Carnival

S&P said it downgraded Carnival Corp. and its unsecured debt two notches to BBB from A-, and they remain on CreditWatch with negative implications.

“The downgrade reflects a significant anticipated loss of revenue and cash flow at least in 2020 compared to our prior base-case estimates, stemming from a rapid decline in consumer sentiment toward travel and cruises in the face of the coronavirus pandemic. Additionally, expanding travel restrictions, quarantines, and a wave of public gathering closures and advisories make it increasingly difficult and less desirable for consumers to travel, at least over the near term,” said S&P in a press release.

Furthermore, S&P sees a rising chance of a recession stemming from the pandemic that could pressure consumer discretionary spending on travel this year, which would slow recovery once it is contained.

Moody's cuts Centrica

Moody's Investors Service said it downgraded to Baa2 from Baa1 the issuer and senior unsecured ratings of Centrica plc. Moody's also downgraded to Ba1 from Baa3 the junior subordinated debt ratings. The outlook was changed to stable from negative.

The rating downgrade considers the persistently challenging environment in Centrica's markets of operations and the resulting deterioration in the company's credit metrics, with financial ratios no longer commensurate with the previous Baa1 rating.

The stable outlook reflects Moody's expectation Centrica will be able to navigate the challenges in its markets, including because of the recent drop in commodity prices, and will take measures, as these may be necessary, to shore up its financial profile so its credit metrics are commensurate with the Baa2 ratings.

Moody's cuts Chugoku

Moody's Investors Service said it downgraded to Baa2 from A3 the long-term issuer and senior secured bond ratings of the Chugoku Electric Power Co., Inc. The outlook has been changed to stable from negative.

"The downgrade reflects our view that Chugoku Electric's credit metrics will remain well below those of its domestic and global peers at least for the next few years, while its nuclear reactor remains shut," said Yukiko Asanuma, a Moody's analyst, in a press release. "In addition, the rating actions reflect rising business risks from recent investments outside its legacy utility business."

The stable outlook is based on Chugoku Electric being able to manage its utility spending, retains its high market share, and limits its non-utility exposure and maintain at least the current level of credit metrics.

Moody's cuts Continental

Moody's Investors Service said it downgraded the issuer rating of Continental AG. Concurrently, Moody's downgraded the senior unsecured ratings of Continental and subsidiaries Conti-Gummi Finance BV and Continental Rubber of America, Corp. The outlook is negative.

“The rating downgrade to Baa2 ratings reflects the further deterioration in the operating environment for European automotive parts suppliers, the resulting pressure on Continental's profit margins and financial metrics, as well as the company's elevated distributions to shareholders,” said Matthias Heck, a Moody's vice president, senior credit officer and lead analyst for Continental, in a press release.

“The negative outlook is driven by the current uncertainty facing the auto sector for 2020 and beyond. The spreading of Covid-19 across Europe that has led to weaker consumer sentiment could make it challenging for Continental to sustain leverage and cash flow metrics at levels required for a Baa2,” added Heck.

Fitch trims Jackson National

Fitch Ratings said it downgraded the long-term issuer default rating of Jackson National Life Insurance Co. to A from A+. The outlook is negative. The downgrade follows Prudential's announcement it will pursue a minority initial public offering of its Jackson National's U.S. operations.

Proceeds would be redeployed as growth capital into the company's operations, as it seeks to further accelerate its growth and diversification strategy.

Fitch also affirmed Prudential plc's IDR at A. The outlook for Prudential is stable.

Fitch places Boeing on watch

Fitch Ratings said it placed the ratings for the Boeing Co. and Boeing Capital Corp. on rating watch negative, reflecting the effect coronavirus is having on the aviation sector.

This new risk combines with the ongoing risks related to the timing of the return-to-commercial service of the 737 MAX. These concurrent risks could influence the pace of the 737 MAX delivery to ramp-up after the grounding is lifted, which could slow the rate of debt reduction from peak debt levels, which will be higher than Fitch had previously expected.

Fitch rates both companies A-.

S&P changes Disney view to negative

S&P said it revised the outlook for the Walt Disney Co. to negative from stable citing event cancellations and travel restrictions.

“Disney is exposed to the coronavirus through advertising, film studios and its theme parks. The coronavirus global pandemic is finally starting to meaningfully affect the U.S., following a period of growing contagion outside the U.S. Numerous live events across the country have been recently postponed or canceled,” said S&P in a press release.

The negative outlook reflects the increased uncertainty around the effect of the coronavirus crisis on the global economy and specifically how it could affect Disney's ability to reduce its leverage to under 2.5x by the end of fiscal 2021 as previously expected.

S&P affirmed Disney’s A ratings.

Fitch revises Eastman Chemical view negative

Fitch Ratings said it affirmed Eastman Chemical Co.'s long-term issuer default rating and senior unsecured debt ratings at BBB, but revised the outlook to negative from stable.

“The negative outlook reflects the company's historical and forecast financial profile, which is above tolerances for the rating. The company has not achieved its 2.5x total debt/EBITDA goal, and exposure to the automotive, consumer durable and construction markets could make this goal challenging to achieve in the current macroeconomic environment without a shift in capital allocation,” said Fitch in a press release.

S&P puts Hawaiian Holdings on watch

S&P said it placed the ratings for Hawaiian Holdings Inc. on CreditWatch with negative implications.

Hawaiian suspended its routes to South Korea and is delaying its planned capacity expansion to Japan. “Over time, we also expect the company to reduce capacity on its domestic routes between the continental U.S. and the Hawaiian Islands. Although the company should also benefit from lower fuel prices, we do not believe the reduced capacity and cost savings will be adequate to offset sharply lower traffic,” said S&P in a press release.

“We expect to resolve the CreditWatch placement when we have more information regarding the degree and timing of the return of passenger travel. If we expect that FFO to debt is likely to average below 25% over the 2020-2021 period, we would likely lower the ratings,” the agency said.

Fitch revises OMV outlook to negative

Fitch Ratings said it revised OMV AG's outlook to negative from stable and affirmed the company's long-term issuer default rating and senior unsecured rating at A-.

The revision of the outlook reflects an increase in OMV's funds from operations-adjusted net leverage above Fitch’s 2x sensitivity for a negative rating action in the medium-term, driven by the sizeable debt-funded acquisition of a stake in Borealis AG amid lower commodity prices, worsening hydrocarbons demand and OPEC's failure to agree to production cuts, said the agency.

Moody's reviews PepsiCo for downgrade

Moody's Investors Service said it placed the A1 senior unsecured long term ratings of PepsiCo, Inc. on review for downgrade following the company's Wednesday announcement it will acquire Rockstar Energy Beverages for $3.85 billion and about $700 million of payments related to future tax benefits.

The review will focus on the financial metrics that will result from the acquisition, including anticipated higher leverage and lower retained cash flow to net debt, as well as on the company's financial policies, which have become more aggressive in recent years.

The Rockstar deal will follow PepsiCo's acquisition of Pioneer Foods Group Ltd. for $1.7 billion and Hangzhou Haomusi Food Co., Ltd. for $705 million.

Moody's rates Zimmer Biomet notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Zimmer Biomet Holdings, Inc.'s proposed senior unsecured note offering.

Proceeds will be used to repay at maturity a portion of the $1.5 billion senior unsecured notes maturing on April 1, which are also rated Baa3. The transaction is credit positive, as it will extend the company's debt maturity profile. All of Zimmer Biomet's ratings remain unchanged and the outlook remains stable.

Moody's changes Prudential view downward

Moody's Investors Service said it affirmed Prudential plc's long-term credit ratings and changed the outlook to negative from stable.

The negative outlook on Prudential reflects the diminished diversification benefits following completion of the planned minority initial public offering of Jackson National Life Insurance Co. to the group's earnings, cash flows and capital, as well as uncertainty regarding the importance of the U.S. operations to Prudential group in the longer-term.

Moody's: Yorkshire Water notes to Baa2

Moody's Investors Service said it downgraded to Baa2 from Baa1 the senior secured rating of the class A notes issued by Yorkshire Water Services Finance Ltd. and Yorkshire Water Finance plc. Concurrently, Moody's confirmed the Baa2 corporate family rating of Yorkshire Water Services Ltd. and other ratings of Yorkshire Water Services Finance and Yorkshire Water Finance plc. The outlook is negative.

The rating actions follow Yorkshire Water's announcement it will not accept the revenue limits set by the Water Services Regulation Authority, Ofwat, for the five-year regulatory period starting in April.

Ofwat will now refer its determination to the Competition and Markets Authority, which will form its conclusion on the price controls. The redetermination is likely to take at least six months and may be extended by a further six months. This concludes the rating review started on Dec. 20.

© 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.