Moody's trims Pearl Holding III

Moody's Investors Service said it downgraded Pearl Holding III Ltd.'s corporate family rating and senior secured bond rating to B3 from B2. The outlook remains negative.

"The downgrade reflects our expectation that Pearl III's leverage and cash flow will remain weak this year, as the coronavirus outbreak disrupts global supply chains and hurts end-market demand," said Gloria Tsuen, a Moody's vice president and senior credit officer, in a press release. "This situation could further weaken Pearl III's limited liquidity buffers and, if sustained, increase the company's probability of financial distress."

Moody's expects Pearl III's adjusted debt/EBITDA in 2020 to remain elevated and largely stay between 7x-8x, similar to levels recorded in 2019, but significantly higher than 5.1x in 2018. Likewise, its EBITA/interest will remain weak at below 1x. These credit metrics are no longer appropriate for a B2 rating, the agency said.

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