Moody's changes TUI outlook to positive

Moody's Investors Service said it revised the outlook for TUI AG to positive from stable and affirmed the B3 corporate family and the B3-PD probability of default ratings.

On Dec. 13, TUI reported its agreement with the German Economic Stabilization Fund (WSF) to fully repay the stabilization measures granted by WSF through a capital increase. The closing of the repayment agreement is still subject to confirmation by the European Commission that it does not raise any objections under state aid law.

The stabilization measures include the €420 million Silent Participation I and the €59 million outstanding warrant-linked bond granted by WSF in January 2021. Repayment with new equity will reduce (pro forma) Moody's adjusted leverage to around 5.6x from 6.1x at fiscal year ending Sept. 30.

“The intended capital increase, if successful, will improve TUI's credit metrics, strengthen its balance sheet and reduce its reliance on the support measures provided by the German state during the coronavirus pandemic. The proposed repayment agreement also demonstrates the company's continued commitment to return to its historical financial metrics with a gross leverage target of less than 3x,” Moody’s said in a press release.

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