S&P puts TUI on positive watch

S&P said it affirmed TUI AG’s B- rating and placed its ratings on the issuer and its €1.75 billion revolver on CreditWatch with positive implications.

“Following approval from TUI's shareholders for the reverse stock split at the annual general meeting, we see a high likelihood that the rights issue can materialize in fiscal 2023 and reduce leverage by 0.3x-0.9x, depending on how much equity is raised,” S&P said in a press release.

Additionally, the agency expects the issuer to raise more capital to reduce the commitment and utilization of its €2.1 billion KfW revolving credit facility.

“The CreditWatch positive placement reflects our view that TUI will successfully engage in a rights issue and repay at least €479 million of its residual government obligations at market value, which could require raising up to €957 million of equity capital. Depending on the magnitude of the rights issue, we could upgrade TUI by at least one notch. Any additional proceeds are expected to improve liquidity,” S&P said.

S&P said it plans to resolve the positive watch within six months.

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