Moody's trims TUI

Moody's Investors Service said it downgraded the corporate family rating of TUI AG to Caa1 from B2. Concurrently, the agency lowered the senior unsecured rating to Caa1 from B2 and the probability of default rating to Caa1-PD from B2-PD.

Moody’s also changed the outlook to negative from rating under review. This rating action concludes the review Moody's started on March 19.

"Our decision to downgrade TUI's ratings further reflects the unprecedented disruption of the tourism sector as a result of the coronavirus outbreak (Covid-19). It becomes obvious that TUI's business will remain disrupted even once the lockdowns are lifted. Economic recession, precautionary measures to prevent contagion making travel more complicated and concerns over the potential second wave of the coronavirus will continue to weigh on demand for TUI's products and services," said Vitali Morgovski, a Moody's assistant vice president, analyst and lead analyst for TUI, in a press release.

The negative outlook mirrors uncertainty over the company's ability to protect enough liquidity given the unprecedented disruption of the tourism sector and the future capital structure once the company returns to business as usual, Moody’s said.

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