S&P assigns BB- to Salini Impregilo notes

S&P said it assigned its BB- issue rating to Salini Impregilo SpA’s proposed senior unsecured notes of up to €690 million due 2027.

S&P also assigned a 4 recovery rating reflecting the notes’ unsecured and unguaranteed nature, and structural subordination to significant prior-ranking claims. The agency estimates recovery prospects at 35%. Most bank lines and revolving credit facilities rank pari-passu with the bonds.

Salini Impregilo intends to use the proceeds to refinance most of its €600 million unsecured notes maturing in 2021 through a notes exchange, and repay a portion of its debt. The new capital structure would have an average maturity of 4.5 years, compared with 3.6 years currently if the entire €600 million notes are exchanged.

“We expect the documentation for the proposed new bond will be broadly in line with that for the existing notes. It includes one incurrence covenant stipulating a minimum consolidated interest coverage ratio of 2.5x, which limits the company’s ability to incur additional debt, and permitting debt at the issuer or material subsidiaries of up to 15% of consolidated assets. There is no restricted-payment covenant, but the documentation will come with a €50 million cross-default threshold provision,” said S&P in a press release.

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