Fitch downgrades Thomas Cook

Fitch Ratings said it downgraded Thomas Cook Group plc's long-term issuer default rating to CCC+ from B and placed it on Rating Watch negative.

Fitch also said it placed on Rating Watch negative and downgraded the senior unsecured rating to CCC+ with recovery rating of RR4 from B+ with recovery rating of RR3 for the bonds issued by Thomas Cook and Thomas Cook Group Finance plc.

The downgrades reflect the tight liquidity expected at the end of 2019 should the company not sell its airline division or be able to draw on the planned £300 million senior secured facility based on the currently agreed mandate letter and term sheet, the agency said.

Fitch said it expects EBIT and profitability to be lower than previous forecasts as the company faces lower bookings in its main markets, continuing fierce competition and Brexit uncertainty.

The agency also said it expects free cash flow will again be negative this year, the agency said, with a group leverage forecast of higher than 6.5x over the next three years.

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