S&P revises Almaviva view to negative

S&P said it revised its outlook on Almaviva SpA to negative from stable.

The agency also affirmed the B+ long-term issuer credit rating on the company.

At the same time, S&P affirmed the B+ issue ratings on Almaviva's €250 million 7¼% senior secured notes. The recovery rating remains at 3, indicating an expectation of meaningful recovery (55%) in the event of a payment default.

“The outlook revision to negative reflects our belief that S&P-adjusted leverage will be materially higher in 2018 than we previously expected, driven by lower EBITDA in the CRM business, particularly in Brazil, and a negative foreign exchange impact suffered over 2017-2018,” the agency said in a news release.

“We still anticipate that adjusted leverage will likely drop below 5x from ongoing operational improvements in CRM and solid performance of the IT division in Italy.

“But we think that ratios commensurate with the ratings would be achieved only in 2019, one year later than initially expected, and any renewed setbacks in CRM or slower progress than anticipated during this time could compromise our revised base case.”

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