S&P: TUI notes up to 3

Standard & Poor's said that it revised the recovery rating on TUI AG's senior pari passu-ranking debt to 3 from 4, indicating the expectation of meaningful (50%-70%) recovery in the event of a payment default.

The issue rating on the senior debt was affirmed at B-, in line with the long-term corporate credit rating on TUI.

The senior debt consists of a €625 million senior bond due 2011; a €450 million senior fixed-rate bond due 2012; a €694 million convertible bond due 2012; a €218 million convertible bond due 2014; and a €100 million private placement due 2014.

The recovery rating on TUI's €300 million of perpetual notes remains unchanged at 6, indicating the expectation of negligible (0%-10%) recovery in the event of a payment default. The issue rating on these notes was affirmed at CCC-.

The revision of the recovery rating on the senior debt reflects the view that TUI has simplified its asset structure in recent months through material repayments of shareholder loans, S&P said. These repayments follow a recovery in profitability at TUI's 35.3%-owned subsidiary TUI Travel plc.

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