S&P rates Thomas Cook notes B

Standard & Poor’s said it assigned a B rating to the proposed €400 million senior unsecured bond due 2021 to be issued by Thomas Cook Finance plc.

The agency also said it assigned a recovery rating of 4 to the proposed bond, indicating 30% to 50% expected default recovery.

The issue rating of B and recovery rating of 4 on Thomas Cook’s existing senior unsecured bonds are unchanged.

The proceeds of the new bond will be used to refinance the existing €400 million bond due 2015.

The agency said it assumes that Thomas Cook’s revenues will come under pressure if the global economy deteriorates, leading to a material contraction in average customer spending and a substantial risk of the company being unable to refinance the debt maturing in 2017.

The ratings also consider the company’s well-established market position, high brand awareness and the critical mass of its operations, S&P said.

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