S&P cuts Amigo Loans

S&P said it downgraded Amigo Loans Ltd. to B and its senior secured bonds to B-. Both ratings were placed on CreditWatch with negative implications. The recovery rating is unchanged at 5 (10%-30%; rounded estimate: 10%).

“The rating actions indicate that we now consider management and governance weakness, which has been building over the past nine months, to be a material and present negative credit factor. On Jan. 27, 2020, Amigo unexpectedly announced that its majority shareholder, Richmond Group Ltd., was willing to sell its majority stake in the business and that as a result it had launched a strategic review and sale process. The CEO, Hamish Paton, announced his resignation and the chairman, Stephan Wilcke, announced that he did not intend to stand for re-election at the next AGM, in December 2019,” said S&P in a press release.

Amigo also announced revised growth prospects in August. The business has also been under pressure from its regulator and its previous CEO resigned earlier in 2019 for health reasons. “These frequent and unexpected developments have caused us to question Amigo's future strategic direction, financial policy and operating model,” said S&P.

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