Moody's upgrades Takko

Moody's Investors Service said it upgraded the corporate family rating of Takko Fashion Sarl to Caa2 from Caa3 and its probability of default rating to Caa2-PD from Ca-PD.

Moody's also upgraded to Caa2 from Caa3 the rating on the €510 million of guaranteed senior secured notes due in November 2023 issued by Takko Luxembourg 2 SCA, a 100%-owned subsidiary of Takko. The agency changed the outlook to stable from negative for both companies.

“Our decision to upgrade Takko's rating reflects the company's decision to resume the interest payment on its notes that was previously suspended in May 2020, which suggests that the company's liquidity profile is better than initially anticipated, and, as such a debt restructuring is unlikely in the next 12 months,” said Guillaume Leglise, a Moody's assistant vice-president and lead analyst for Takko, in a press release.

"At the same, the Caa2 rating incorporates the uncertainty over the company's sales recovery in the current challenging environment. This could mean that in due course a further hit to cash flows and liquidity may make the capital structure unsustainable," added Leglise.

The outlook considers the view Takko's operating results will gradually recover over the next 12-18 months, Moody’s said.

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