S&P cuts Output Services Group

S&P said it lowered its ratings for Output Services Group Inc. and its first-lien facilities to CCC from CCC+ and the second-lien term loan to CC from CCC-. The agency removed all the ratings from CreditWatch with negative implications where they were placed on April 1. The recovery ratings on the first- and second-lien facilities are unchanged.

“The company is currently in technical default due to the breach of its total net leverage covenant, though we expect it to secure a waiver this week. The downgrade follows OSG’s notice that it breached its 7x financial maintenance total net leverage ratio covenant for the first and second quarters of 2020,” S&P said in a press release.

Output restated its covenant compliance ratio to 7.03x (from 6.73x) and 7.54x (from 6.94x) in the first and second quarters, respectively, because of a misclassification error. Under its credit agreement, the ratios are considered an event of default, the agency said.

As of Tuesday, S&P said it understands Output secured enough lender support for a waiver.

The outlook is negative.

S&P cuts FTS

S&P said it lowered its issuer and note ratings for FTS International Inc. to D from CC after the company filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.

Moody’s downgrades FTS

Moody’s Investors Service said it cut FTS International, Inc.’s probability of default rating to D-PD from Ca-PD. The agency affirmed FTSI’s other ratings, including the Ca corporate family rating and Ca senior secured debt ratings.

These actions follow the FTS’ filing for bankruptcy on Tuesday.

The outlook is negative.

Moody’s said it plans to withdraw its ratings on the company shortly.

Moody’s cuts Garrett Motion

Moody’s Investors Service said it downgraded the long-term corporate family rating of Garrett Motion Inc. to Caa1 from B2 and the probability of default rating to Ca-PD/LD from B2-PD, following the company’s announcement it filed for protection under Chapter 11.

Moody’s also cut the senior unsecured rating of Garrett LX I Sarl to Caa2 from Caa1. Concurrently, Moody’s confirmed the B2 the senior secured bank credit facilities ratings of the company’s subsidiaries Garrett LX III Sarl, and Garrett Motion Sarl.

The agency changed to the outlook on all the companies to stable from ratings under review for downgrade.

This rating action concludes the review for downgrade started on Sept. 2, Moody’s said.

Moody’s said it would withdraw its ratings because of the bankruptcy.

Fitch downgrades Laos

Fitch Ratings said it downgraded Laos’ long-term foreign-currency issuer default rating to CCC from B-.

“The downgrade of Laos’ rating to CCC reflects deepening external liquidity pressures as a result of the coronavirus shock and the sovereign’s large debt maturities. The authorities have secured some new financing in recent months, but their financing options have nevertheless narrowed and foreign-exchange buffers remain low. A projected deterioration in the fiscal deficit in line with Fitch’s forecast will increase near-term financing needs. These developments have diminished the ability of the sovereign to meet its debt service obligations, in Fitch’s view,” the agency said in a press release.

The company has about $500 million in debt due before the end of the year and another $1.1 billion due over four years.

S&P cuts Pasha

S&P said it lowered the rating the Pasha Group to B- from B and its issue-level rating to B+ from BB-. The recovery rating of 1 (90%-100%; rounded estimate: 95%) is unchanged.

“Despite our expectation for recovery in the second half that benefits from increasing cargo volumes to Hawaii, we expect the Pasha Group’s overall 2020 operating performance will be weaker compared to 2019, due to the Covid-19-related hit. In addition, adjusted debt balances have increased due to Pasha’s joint venture term loans to fund the construction of two new vessels through its wholly-owned special purpose entities (SPEs),” S&P said in a press release.

S&P said it now forecasts Pasha’s adjusted leverage to rise above 8x in the next 12 months.

The outlook is negative.

S&P trims Technicolor

S&P said it downgraded Technicolor SA to SD from CC after completing its previously announced debt-for-equity swap. The agency also lowered the ratings on its debt to D.

The agency also affirmed the CCC issue-level rating on Technicolor’s new debt, given its insulation from the debt-to-equity swap.

“Because the new €457 million of debt issued by Tech 6 and Technicolor USA, Inc. – two subsidiaries of Technicolor SA – was not part of the debt-to-equity swap, we affirmed our rating on it at CCC,” S&P said in a press release.

The positive CreditWatch on the new €457 million financing indicates S&P will raise the rating likely by more than one notch, once it raises the issuer credit rating from SD, the agency said.

S&P trims Travelport

S&P said it lowered its ratings on Travelport parent Toro Private Holdings I and its finance subsidiary Travelport Finance (Luxembourg) Sarl to CC from CCC. The agency also lowered the ratings on the first-lien facilities to CC from CCC and second-lien loan to C from CC.

The agency also placed all its ratings for the companies on CreditWatch with negative implications.

“The downgrade follows Travelport’s announcement of a debt restructuring plan. U.K.-based Travelport announced on Sept. 17, 2020, that it has agreed with an ad hoc lender group on a debt exchange and restructuring, which includes a new $500 million priority lien facility. The restructuring plan will also release the parties from all related litigation and claims against each other,” S&P said in a press release.

S&P said it views the exchange as distressed. The CreditWatch indicates the agency will downgrade Travelport to SD and its outstanding debt to D once the debt restructuring is completed, which is expected to occur by Sept. 24, S&P said.

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