Fitch confirms Accor senior debt at BBB+

Fitch Ratings confirmed Accor's senior unsecured debt at BBB+ with a stable outlook, noting the French-based hotel owner just sold €560 million of convertible bonds.

Accor's financial ratios have deteriorated since the global hotel market entered one of its worst periods in 2001. However, this has been less marked than its peers, Fitch added.

Accor's ratings continue to reflect a strong business profile, with stable economy hotels in Europe together with the U.S. accounting for 43% of consolidated EBITDAR in the first half of 2003. Fitch also takes comfort from management's focused strategy on organic growth in the economy hotel segment.

These factors partly mitigate a currently relatively high financial leverage.

The lease-adjusted leverage of net debt/EBITDAR of 4.9x at June 30 is on the high side for the industry, with some two-thirds of this figure made up of operating lease commitments that display better liquidity characteristics than traditional funding. As a result of Accor's sale & leaseback policy, on-balance sheet net debt has stabilized in the €3.1-3.0 billion range with a good liquidity profile.

Accor has no major refinancing needs prior to 2005 and 2006 when €800 million and €1.9 billion of debt matures, Fitch said. Accor has €705 million of undrawn committed credit facility. The convertible issue further aids this profile.

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