S&P downgrades Thomas Cook

Standard & Poor's said it lowered its long-term corporate credit rating on Thomas Cook Group plc to B from BB-. The outlook remains negative.

At the same time, the agency said it lowered the issue rating on the €400 million senior unsecured notes due 2015 and the £300 million senior unsecured notes due 2017 issued by Thomas Cook to B from BB-. The recovery rating on these instruments remains unchanged at 4, indicating an expectation of average recovery in the event of a payment default.

S&P said the downgrade reflects its view of the risk that Thomas Cook's recent request to its banks for an additional liquidity buffer signals a potential downside for both its future earnings capacity and its financial metrics. The deterioration in operating performance, combined with weaker-than-expected pre-booking during the slow winter booking season, have significantly impaired cash flow generation and materially reduced the liquidity buffer that Thomas Cook uses to cope with the seasonal trough expected in December, S&P said.

However, the agency said it believes that the good relationship between Thomas Cook and its banks could mitigate the risk of a liquidity shortfall or covenant breach over the coming quarters.

© 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.