S&P affirms Amigo on tap issue

S&P said it affirmed the B+ long-term issuer credit rating on Amigo Loans Ltd.

The outlook is stable.

The agency also said it affirmed the B+ rating on the senior secured notes issued by wholly owned subsidiary, Amigo Luxembourg SA.

S&P also said it revised the recovery rating on these notes to 4 from 3.

The 4 recovery rating indicates 30% to 50% expected default recovery.

Amigo maintains a leading position in the U.K. guarantor lending market, a relatively new sector for the nonstandard lending market, S&P said.

Via its direct subsidiary Amigo Luxembourg, the company announced plans to raise a further £50 million from a tap of its £275 million senior secured notes due in 2024, leading to a decline in recovery prospects on these notes, the agency said.

The company intends to use the proceeds from the issue for general corporate purposes, including financing growth in the U.K. market, S&P said.

Given the increased amount of senior secured notes and an upsized super senior revolving credit facility, coupled with anticipated revenue growth of 30% to 35% per year, the agency said it expects that Amigo will gradually reduce its leverage over the next few years.

This is in partly due to an expectation that its debt will remain relatively stable, S&P said.

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